The major U.S. stock indexes were down across the board on Thursday, a day after hitting two-month highs, on simmering U.S.-China trade relations, raising doubts about the trade deal reached early this year between the world’s two largest economies.
While earlier beefs with China centered on its responsibility in the spread of the coronavirus, this one is over Hong Kong. President Donald Trump said the United States would react strongly if China imposes national security laws for Hong Kong in response to last year’s often violent pro-democracy protests.
In the U.S. cash market on Thursday, the benchmark S&P 500 Index settled at 2948.51, down 23.10 or -0.88%. The blue chip Dow Jones Industrial Average finished at 24474.12, down 101.78 or -0.46% and the technology-based NASDAQ Composite closed at 9284.88, down 90.90 or -1.17%.
Earlier, Secretary of State Mike Pompeo criticized Beijing’s handling of the coronavirus outbreak, while a Chinese official said the country will not flinch from any escalation in tensions.
The current squabble between the world’s two largest economies over the coronavirus pandemic has raised doubts about the Phase 1 trade deal signed earlier this year, interrupting a rally on the U.S. stock market, Reuters reported.
“It seems like China is going to be used as a punching bag for the upcoming elections,” said Bob Shea, CEO and co-chief investment officer at TrimTabs Asset Management in New York.
“The White House has resolved to itself that it is more effective to swing at China than to salvage what was going to already be a watered-down Phase 1 trade deal. You don’t score any points for that,” Shea said.
Advancing issues outnumbered declining ones on the NYSE by a 1.11-to-1 ratio; on NASDAQ, a 1.02-to-1 ratio favored decliners.
The S&P 500 posted five new 52-week highs and no new lows; the NASDAQ Composite recorded 51 new highs and four new lows.
Discount Retailer TJX Biggest Boost to S&P 500
Although the S&P 500 Index settled lower on Thursday, its losses were offset by an upbeat outlook from retailer TJX.
The discount chain’s shares jumped 7.6% to a more than two-month high and were the biggest boost to the benchmark S&P 500 after it flagged strong sales at its stores that had reopened post-coronavirus lockdowns.
Fall in Unemployment Claims Lifts Sentiment
A fall in unemployment claims from the previous week also lifted sentiment as the reading reaffirmed views that the worst of the pandemic’s damage on the labor market was over.
First-time filings for unemployment insurance totaled 2.44 million last week, about in line with economist estimates. That brings the total filings during the coronavirus pandemic to 38.6 million.
The report showed the trajectory of job losses has come down dramatically. Furthermore with states starting to reopen, we will see some jobs come back. We may actually see a few more weeks of bad jobless claims before we start to see things bottom out.
This article was originally posted on FX Empire
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