Wall Street Closes Higher 05/29 16:20
Stocks closed out a solid week on Wall Street Friday with a late-afternoon
rebound after worries that President Donald Trump would reignite a costly trade
war with China faded.
(AP) -- Stocks closed out a solid week on Wall Street Friday with a
late-afternoon rebound after worries that President Donald Trump would reignite
a costly trade war with China faded.
The benchmark S&P 500 index rose 0.5%, recovering from a 1% slide, after
Trump outlined several actions in response to a move by China to exert more
control over Hong Kong but steered clear of upending a trade pact struck with
Beijing earlier this year. The S&P 500 ended the month 4.5% higher, its second
monthly gain in a row.
The world's two largest economies agreed to a Phase 1 trade deal in January
after more than a year of talks and billions of dollars in tariffs imposed on
each other's imports. Worries that the Trump administration would pull out of
the deal with the world's second-largest economy weighed on the market for much
of the day, until the president's mid-afternoon statement.
"Much ado about nothing," Sam Stovall, chief investment strategist at CFRA,
said of the remarks. "The immediate concern, meaning the cessation of the Phase
1 (trade) accord, did not end up being put on the table, much to traders'
Technology and health care stocks accounted for much of the market's gains.
That helped offset losses in banks, industrial companies and elsewhere. Bond
yields fell and gold prices rose, signs that investors remain cautious. Oil
recovered from an early slide.
All told, the S&P 500 rose 14.58 points to 3,044.31. The index ended the
week with a 3% gain. The Dow Jones Industrial Average fell 17.53 points, or
0.1%, to 25,383.11. The Nasdaq composite, which is heavily weighted with
technology stocks, gained 120.88 points, or 1.3%, to 9,489.87. The Russell 2000
index of small company stocks gave up 6.64 points, or 0.5%, to 1,394.04.
Stocks have now recouped most of their losses after the initial economic
fallout from the coronavirus pandemic knocked the market into a breathtaking
skid in February and March, though the S&P 500 is still down 10% from its
all-time high in February.
On Thursday, China's National People's Congress approved a national security
law aimed at suppressing secessionist and subversive activity in Hong Kong,
overriding any potential opposition by local lawmakers.
In his remarks, Trump blasted China, saying Hong Kong is no longer
"sufficiently autonomous" to warrant the preferred status that the U.S. had
been giving the former British colony when it comes to export controls,
extradition treaties and travel.
"Basically, he's going to treat Hong Kong the way he treats China," Stovall
Trump also said the U.S. would cut ties with the World Health Organization,
saying it had failed to adequately respond to the coronavirus because China has
"total control" over the global organization.
The move by China to get a tighter grip on Hong Kong could undermine the
city's status as a major center for trade and finance. Hong Kong's Hang Seng
index finished 0.7% lower Friday.
Washington and Beijing have been trading harsh rhetoric recently on
everything from Hong Kong to the response to the coronavirus outbreak. That
stoked worries that the renewed tensions could lead to another punishing round
of escalating tariffs between the two countries, which would only further
damage a global economy punished by a severe recession due to the pandemic.
The U.S. stock market plunged 34% from late February through late March but
has rebounded quickly since then after the Federal Reserve and Congress pledged
unprecedented amounts of aid for the economy. Recently, investors have favored
stocks that would benefit the most from a reopening economy.
Governments around the country and around the world are slowly lifting
restrictions meant to corral the outbreak. That has many investors hoping the
worst of the recession has already passed, or will soon. However, concerns
remain that the relaxing of stay-at-home mandates and the reopening of
businesses could lead to another surge in infections, potentially extending how
long it will take for the economy to recover.
"We're in an incredibly fragile economy right now, and things are just
getting back," said J.J. Kinahan, chief market strategist at TD Ameritrade.
"You need as much momentum as you can that encourages people to go out and
spend money. Anything that upsets that fragile sort of enterprise has the
opportunity to really set the stock market and the total economy off course."
The yield on the 10-year Treasury, a benchmark for interest rates on many
consumer loans including mortgages, fell to 0.65% from 0.70% late Thursday.
Lower yields mean investors are cautious about the prospects for economic
growth and healthy amounts of inflation.
Oil prices rose. Benchmark U.S. crude oil for July delivery rose $1.78 to
settle at $35.49 a barrel. Brent crude oil for July delivery rose 4 cents to
$35.33 a barrel.
Stock indexes in Europe closed broadly lower following a mixed finish in