Stocks fell sharply Thursday morning, amid investor concern that trade tensions between the U.S. and China could get worse before they improve.
How are the major benchmarks trading?
The Dow Jones Industrial Average DJIA, -1.40% lost 301 points, or 1.2%, at 25,472, while the S&P 500 index SPX, -1.29% fell 31 points, or 1.1%, to 2,825. The Nasdaq Composite Index COMP, -1.56% meanwhile, retreated 97 points, or 1.3%, to 7,652.
On Wednesday, the Dow Jones Industrial Average lost 100.72 points, or 0.4%, to 25,776.61, and the S&P 500 index fell 8.09 points, or 0.3%, to 2,856.27. The Nasdaq Composite Index slipped 34.88 points, or 0.5%, to 7,750.84.
What’s driving the market?
U.S. investors are beginning to adjust to the idea of a protracted standoff between the U.S. and China, as increased trade tensions have continued to weigh on stocks in general and the technology sector in particular.
Read: Trade standoff between U.S., China may be settling in for the long run
Weakness in global markets spread to the U.S. Thursday morning as investors digested the implications of new U.S. export restrictions placed on Chinese telecom firm Huawei Technologies Co., with The Wall Street Journal reporting that U.K.-chip design company Arm Holdings was halting business with Huawei, sparking volatility overnight.
Trade talks can only continue when the U.S. adjusts its “wrong actions,” Gao Feng, a spokesperson for China’s Ministry of Commerce, reportedly said Thursday in a briefing, according to translated remarks. He added that the U.S. crackdown on China companies is threatening the “global industrial and supply chain.”
Meanwhile, the South China Morning Post reported that tensions are forcing China to rethink its entire economic relationship with the U.S. That’s as Huawei, meanwhile, is reportedly exploring the development of its own operating system if it can’t access that of Alphabet’s GOOGL, -1.07% Google or Microsoft Corp. MSFT, -1.50%
Economic data from Europe may also be contributing to fears over global growth, after IHS Markit’s flash composite purchasing manager’s index showed the eurozone manufacturing sector falling further into contraction, with factory managers cutting staff levels for the first time since August of 2014.
Stocks on Wednesday failed to get a lift from the minutes of the Federal Open Market Committee’s latest meeting, which revealed interest rates are on course to remain steady “for some time.”
What are analysts saying?
“The prospect of a speedy conclusion to the current tensions between the U.S. and China continues to recede, and as such the caution of the last few days, runs the risk of turning into a full-blown retreat from those sectors that are likely to be hit the hardest, from further escalations,” said Michael Hewson, chief market analyst at CMC Markets, in a note to clients.
What’s on the economic calendar?
The number of Americans applying for jobless benefits fell to 211,000 in the week ended May 18, from 212,000 the week prior. Economists polled by MarketWatch expected a 217,000 reading.
IHS Markit will release its U.S. manufacturing and services purchasing managers indexes for May due at 9:45 a.m. Eastern Time, while data on new home sales for April are due at 10 a.m.
Which stocks are in focus?
L Brands Inc. LB, +14.23% reported better-than-expected first-quarter earnings Wednesday evening, while the parent of Victoria’s Secret raise its guidance for the year. The stock rose 6% early Thursday, though it’s down more than 10% in 2019.
Shares of Best Buy Co. BBY, -4.48% fell 3.9% Thursday, after the big-box retailer reported first-quarter earnings that beat Wall Street forecasts, but issued a subdued outlook for the full-year 2019.
NetApp Inc. reported fourth-fiscal-quarter earnings Wednesday after the close, with earnings falling short of expectations alongside declining revenue. The stock is down 9.6% Thursday morning.
Shares of Medtronic PLC MDT, +1.85% rose 2.8% in premarket action, after the medical-device company reported better-than-expected earnings for its fourth fiscal quarter.
Shares of Apple Inc. AAPL, -2.29% remain under pressure Thursday, after UBS cut its price target on the stock from $235 to $225, following the release of its annual survey of smartphone users, which indicated that the time consumers wait before upgrading to a new phone will continue to lengthen. Earlier this week, Goldman Sachs analyst Rod Hall estimated that 29% of the company’s earnings could be at risk if China decided to ban sales of Apple products. The stock is down 1.5%, and has fallen 4.8% so far this week.
How are other markets trading?
Stock markets in Asia closed lower, with the Shanghai Composite SHCOMP, -1.36% losing 1.4%, Hong Kong’s Hang Seng Index HSI, -1.58% down 1.6% and Japan’s Nikkei 225 NIK, -0.62% falling 0.6%. European stocks SXXP, -1.45% were trading 1.2% lower Thursday.
Among commodities, crude prices US:CLU8 fell sharply, while gold GCM19, +0.79% inched up and the U.S. dollar DXY, +0.08% DXY, +0.08% DXY, +0.08% DXY, +0.08% was higher, notably against the British pound GBPUSD, -0.0790%
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https://www.marketwatch.com/story/us-stock-futures-drop-as-china-trade-spat-continues-to-unsettle-investors-2019-05-23
2019-05-23 13:44:00Z
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