Friday’s Stock Market Close: US Equities Finish Narrowly Mixed, But Above Earlier Lows, Ahead Of Holiday Weekend

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KEY POINTS

  • Dr. Anthony Fauci said Moderna’s covid-19 vaccine looked “promising.”
  • China preparing to introduce a controversial national security law for Hong Kong
  • Trump taking increasingly strident tone against China

U.S. stocks closed narrowly mixed on Friday in choppy trading as investors weighed growing tension between U.S. and China against hopes for a gradual reopening of the American economy.

The Dow Jones Industrial Average slipped 8.96 points to 24,465.16, while the S&P 500 gained 6.94 points to 2,955.45 and the Nasdaq Composite Index rose 39.71 points to 9,324.59.

For the week, the Dow climbed 3.29%.

Friday’s volume on the New York Stock Exchange totaled 3.41 billion shares with 1,546 issues advancing, 26 setting new highs, and 1,379 declining, with seven setting new lows .

Active movers were led by Luckin Coffee Inc. (LK), Ford Motor Co. (F) and Norwegian Cruise Line Holdings (NCLH).

Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said the covid-19 vaccine being developed by that Moderna (MRNA) looked “promising.” Moderna shares rose more than 2% on those comments.

Fauci also told CNBC he was “enthusiastic” about the U.S. economy reopening.

“We can’t stay locked down for such a considerable period of time that you might do irreparable damage and have unintended consequences, including consequences for health,” said Fauci. “It’s for that reason that the guidelines have been put forth so that the cities and states can start to reenter and reopen.”

President Donald Trump said “we are not closing our country” if a second wave of coronavirus infections strikes the U.S. “We can put out the fires. Whether it is an ember or a flame, we are going to put it out. But we are not closing our country,” he declared.

However, relations between the U.S. and China grew more sour.

China’s Communist Party is preparing to introduce a controversial national security law for Hong Kong that will prohibit “treason, secession, sedition and subversion.” Pro-democracy activists fear the new laws will erode Hong Kong’s freedoms and autonomy.

Earlier this week, the U.S. Senate passed a bill that could lead to the delisting of Chinese stocks from U.S. exchanges.

Ed Mills, Washington policy analyst at Raymond James, said of the bill: “We believe there will be a significant push for the legislation to be taken up in the coming weeks, and we believe it is only a matter of time before this bill (or something similar) is signed into law.”

Trade relations between U.S. and China are also under scrutiny as President Donald Trump appears to be taking a more hardline stance against Beijing ahead of his re-election bid in November.

“Although both sides [U.S. and China] highlighted overnight progress on trade deal implementation and the intention to keep it going, the overall relationship is deteriorating fast,” wrote Sebastien Barbe, the head of emerging-market research and strategy at Credit Agricole CIB. “The issue may well become a major drag on sentiment until U.S. presidential elections in November.”

“This week started off really strong and put us on a good trajectory,” said Matt Stucky, equity portfolio manager at Northwestern Mutual. “There’s an increasing probability that something more permanent in nature is going to fix the problem, and that should be discounted in a positive way.”

“The future remains uncertain, and thus, we are not confident in saying a second wave cannot happen — but the good news, there has yet to be a second wave in re-opened economies,” said Tom Lee, founder and head of research at Fundstrat Global Advisors. “We remain in the half-full camp and believe stocks offer pretty good risk/reward, even here.”

Overnight in Asia, markets finished lower. The Shanghai Composite dropped 1.89%; Hong Kong’s Hang Seng plunged 5.56%; while Japan’s Nikkei-225 slipped 0.8%.

In Europe markets finished narrowly mixed, as Britain’s FTSE-100 dropped 0.37%, while France’s CAC-40 slipped 0.02% and Germany’s DAX gained 0.07%.

Crude oil futures fell 1.33% at $33.47 per barrel, Brent crude edged up 0.34% at $35.25. Gold futures gained 0.73%.

The euro fell 0.44% at $1.0903 while the pound sterling slipped 0.36% at $1.2176.

The yield on the 10-year Treasury fell 2.95% to 0.657% while yield on the 30-year Treasury dropped 2% to 1.371%.