Market Snapshot: Dow closes down 102 points as energy and tech stocks slump amid rising China tensions

U.S. stocks finished lower Thursday, with investors pointing to elevated tensions between Washington and Beijing and a stream of poor economic data, including another 2.4 million job losses last week, as contributors to a lackluster buying mood on Wall Street.

How did benchmarks fare?

The Dow Jones Industrial Average US:DJIA fell 101.78 points, or 0.4%, at 24,474.12, while the S&P 500 index US:SPX ended off 23.10 points, or 0.8%, at 2,948.51. The Nasdaq Composite Index US:COMP fell 90 points or 1% to end at 9,284.88.

All three of the major benchmarks are on track for weekly gains of around 3%, with the S&P 500, up 3%, and Dow, rising 3.3%, on pace for their best weeks since the week ended April 8.

What drove the market?

Markets failed to mount a substantial charge in either direction on Thursday, with investors contending with the tug of war between optimism about states reopening their economies after the lockdowns imposed by the coronavirus and weak economic reports along with mounting animosities between China and the U.S.

On Thursday, the Labor Department report showed 2.44 million people sought unemployment benefits in the week ended May 16 on an adjusted basis, bringing the total number of Americans out of work during the COVID-19 pandemic to nearly 40 million, or nearly 20% of the labor force, on a seasonally adjusted basis. That was slightly higher than the consensus among economists surveyed by MarketWatch.

Katie Stockton, founder and managing partner of Fairlead Strategies, said that investors are torn between the grim reports and the prospect that stock values could pick up steam before the economy catches up. “The fear of missing out can be a driver of momentum, right or wrong,” told MarketWatch in an interview.

The technical analyst warned that the gains for equities thus far can become “a potential contrarian positive for the market if participants feel under-invested and like they need to chase returns.”

See: The economy is finally recovering from the coronavirus, but the ill-effects aren’t going away for a long time

Stocks traded under pressure for most of the session as President Donald Trump tweeted late Wednesday that China’s “disinformation and propaganda attack on the United States and Europe is a disgrace,” while the White House issued a broad attack on Beijing’s economic policies, military buildup, and human rights violations.

While Stockton sees some positives for the market, including attempts at cyclical rotation between sectors, and a few technical benchmarks exceeded, “on an intraday basis anything goes,” she said. “That’s the new normal, the sensitivity to headlines.”

Meanwhile, U.S. senators introduced a bipartisan bill that would sanction Chinese officials and entities who enforce the new national-security laws in Hong Kong, the Wall Street Journal reported Thursday.

Those events come a day after the Senate passed legislation that would effectively bar some Chinese companies from listing on U.S. stock exchanges. Those tensions rippled over Thursday, as Reuters reported that Baidu Inc. US:BIDU is considering delisting from the Nasdaq.

Meanwhile, in other U.S. economic data out Thursday, the Philadelphia Fed’s monthly release showed manufacturing was worse than economists had expected in May, at a reading of -43. The IHS Markit flash PMIs showed another steep decline in services and manufacturing activity for May, while a decline in a closely watched composite measure of leading economic indicators signaled the economic bottom may have come in April yet still “suggest no easy path to recovery,” the report said.

Sales of previously owned homes tumbled nearly 18% to a 10-year low, the National Association of Realtors said Thursday.

Among a number of New York Fed speaker, President John Williams said he sees “a couple very difficult months ahead of us,” noting he was more concerned about deflation than inflation.

Fed Chairman Jerome Powell said: “We are in the midst of an economic downturn without modern precedent,” in remarks at the start of a central bank forum for voices outside of Wall Street called “Fed Listens.”

Also Thursday, Fed No. 2, Richard Clarida, said additional steps to help the economy during the COVID-19 pandemic may be needed, echoing comments by Powell for Congress to do more to help limit the harm from coronavirus-induced business closures. He was speaking during an online talk with the New York Association for Business Economics.

Read: Fed officials discuss how to convince markets that rates will stay low for a long time

Which stocks were in focus?

• Macy’s Inc. US:M shares jumped nearly 6% after management warned on first-quarter sales, even though it said “customer demand is moderately higher than we anticipated” at newly reopened stores.
• AstraZeneca PLC US:AZN shares rose 2.8% after the U.S. government said it would invest $1.2 billion in a coronavirus vaccine trial administered by the company.
• L Brands Inc. US:LB reported a wider-than-expected loss in the first quarter and said it remained “committed” to spinning off its Bath & Body Works business. Shares jumped 18.3%.
• Aurora Cannabis Inc. US:ACB said it was acquiring U.S. company Reliva LLC for roughly $40 million in an all-stock deal. Shares surged 36.5%.
• Take-Two Interactive Software Inc. US:TTWO shares fell nearly 6% after the videogame publisher topped Wall Street estimates.
• Intel Corp. US:INTC on Wednesday announced it has acquired Rivet Networks to boost Wi-Fi offerings for its PC products. Shares closed 1.8% lower.
• TJX Co. US:TJX Shares of gained 6.8% even after the company reported results that missed expectations.
• US:MDT Shares of Best Buy Co. Inc. US:BBY fell 4.4% after the retailer said domestic same-store sales didn’t decline as much as had been anticipated.

How did other markets trade?

U.S. government bond yields were lower as geopolitical tensions ramped up, with the 10-year Treasury note BX:TMUBMUSD10Y down fractionally to 0.677%. Bond prices move in the opposite direction of yields.

The dollar US:DXY was 0.3% higher against a basket of currency trading rivals, according to the DXY Index.

Gold for June delivery US:GCM20 declined $30.20, or 1.7%, to settle at $1,721.90 an ounce. Crude oil for July US:CL rose 43 cents, or 1.3%, to end at $33.92 a barrel on the New York Mercantile Exchange, marking a six-week high.

In Europe, the Stoxx Europe 600 XX:SXXP closed 0.8% lower, while the FTSE UK:UKX ended off 0.9%.

See:Out-of-whack stock and bond prices say something troubling about the coronavirus economy

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