Wall Street ends mixed as China-US tensions weigh

Wall Street ended mixed on Friday in a mostly tame finish to a week of strong gains, as investors gauged China-US tensions and amid ongoing uncertainty about the pace of economic recovery from the coronavirus.

President Donald Trump’s warning on Thursday that the US would react strongly to China’s plan for a national security law in Hong Kong has raised concerns over Washington and Beijing’s possibly reneging on their Phase 1 trade deal. Late in the session, stocks edged lower after the US Commerce Department said it was adding 33 Chinese companies and other institutions to an economic blacklist for human rights violations and to address US national security concerns.

The increasing rhetoric between Washington and Beijing has knocked Wall Street off multi-month highs, although the three main indexes still all rose around 3% for the week, fueled by optimism about an eventual coronavirus vaccine and the easing of virus-related curbs.

“We still think COVID-19 concerns are in the driver’s seat, but we could see US-China relations move back into the front seat,” said Eric Freedman, chief investment officer at US Bank Wealth Management. US stock exchanges will be closed on Monday for the Memorial Day holiday. The Nasdaq index is down about 5% from its February 19 record high, helped in recent weeks by gains in Microsoft, Amazon and other heavyweight companies seen coming out of the economic downturn stronger than their smaller rivals.

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Real estate led the S&P 500 sector indexes higher, while energy dropped as oil prices sank about 3%. A drop in Chevron weighed on the Dow. Unofficially, the Dow Jones Industrial Average fell 8.96 points, or 0.04%, to 24,465.16, the S&P 500 gained 6.94 points, or 0.24%, to 2,955.45, and the Nasdaq Composite added 39.71 points, or 0.43%, to 9,324.59.

Mixed earnings from retailers Walmart Inc, Best Buy Co Inc and Home Depot Inc earlier this week showed online shopping gaining traction with the lockdown orders, a trend that could damage brick-and-mortar players already feeling pressure from internet rivals.

On Friday, Chinese e-commerce giant Alibaba Group reported better-than-expected quarterly profit, but its shares tumbled. Smaller rival Pinduoduo Inc’s US-listed shares surged after the company posted upbeat results.  Nvidia climbed after forecasting strong quarterly revenue as demand surges for its data center chips. KKR & Co rose after India’s Reliance Industries said the private equity firm would buy a 2.3% stake in its digital unit for 113.67 billion rupees ($1.50 billion). Data analytics software maker Splunk Inc jumped after it said it expects more demand for its cloud services.

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