Stocks decline amid renewed US-China trade tension

This article was originally published on this site

Stocks traded lower Friday as tensions between China and the U.S. offset the increasing optimism around a potential coronavirus vaccine.

Load Error

The Dow was down 125 points, while the S&P 500 slid 0.2% and the Nasdaq slipped 0.1%.

Overnight, China released draft legislation over new national security measures on Hong Kong after last year’s burst of anti-government protests in the city. That law is expected to increase Beijing’s hold over Hong Kong. China also opted against setting a GDP target for 2020 as the coronavirus batters the second-largest economy in the world.

That proposal was unveiled after the Senate passed a bill earlier in the week that would potentially delist Chinese stocks from U.S. exchanges.

Ed Mills, Washington policy analyst at Raymond James, said the bill is moving at “warp speed,” noting: “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.”

Those tensions overshadowed positive comments on a potential coronavirus vaccine from Dr. Anthony Fauci. Fauci, director of the National Institute of Allergy and Infectious Diseases, told NPR on Friday that Moderna’s vaccine data looked “promising.”

Moderna rose 3% on those comments. Earlier this week, Moderna said all 45 participants in its vaccine trial had developed coronavirus antibodies. The news sparked a massive rally on Monday and has contributed to the market’s strong gains week to date.

The Dow was up more than 3% week to date and was headed for its biggest one-week gain since the week of April 9. The S&P 500 has gained 2.96% this week while the Nasdaq Composite is up 3% in that time.

Those weekly advances come amid optimism around the global economy reopening as well as rising hopes for a coronavirus vaccine.

“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, the founder and head of research at Fundstrat Global Advisors, in a note. “We remain in the half-full camp and believe stocks offer pretty good risk/reward, even here.”

The S&P 500 has skyrocketed more than 34% since hitting an intraday low on March 23, led in part by strong gains from major tech stocks.

To be sure, a CNBC analysis using data from Johns Hopkins University shows that as U.S. states reopen, more than a third have seen new coronavirus cases rise.

President Donald Trump also said Thursday night “we are not closing our country” if a second wave of coronavirus infections hits 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.”