(Reuters) – A slump in technology stocks knocked Wall Street’s main indexes lower on Friday, as signs of deteriorating trade relations between the United States and China added to economic worries due to the novel coronavirus pandemic.
FILE PHOTO: The New York Stock Exchange (NYSE) is seen in the financial district of lower Manhattan during the outbreak of the coronavirus disease (COVID-19) in New York City, U.S., April 26, 2020. REUTERS/Jeenah Moon
The Trump administration moved to block semiconductor shipments to China’s Huawei Technologies from global chipmakers. China was swift to respond with a report saying it was ready to put U.S. companies on an “unreliable entity list,” according to the Global Times.
China’s countermeasures include launching investigations and imposing restrictions on U.S. companies such as Apple Inc, Cisco Systems Inc, Qualcomm Inc, as well as suspending purchase of Boeing Co airplanes, the report said, citing a source.
Boeing fell 2.9% and Apple was down 2%. The trade-sensitive Philadelphia chip index slumped about 3.7% while the S&P technology sector dropped 1.5%.
The ratcheting up of Sino-U.S. tensions comes a day after President Donald Trump signaled a deterioration of his relationship with China over the virus outbreak, saying he has no interest in speaking to President Xi Jinping right now and going so far as to suggest he could even cut ties with Beijing.
“The overarching concern that we’ve had, as this epidemic has worked its way around the globe, is that U.S.-China relations are heading in the wrong direction and that can cause a worse economic effect than the pandemic itself,” said Art Hogan, chief market strategist at National Securities in New York.
After a strong rally from 2020 lows, the three major stock indexes are on course for their worst week since mid-March, as sobering comments on the pandemic from major U.S. officials pointed to a longer period of economic weakness.
Meanwhile, economic data continued to paint a grim picture with the latest batch of reports indicating U.S. retail sales and manufacturing output endured record declines in April as the virus-led slump seeped into the second quarter.
“After that big rally (in April) it makes sense that stocks may pull back to align a little more with the weakening economic data that we’re seeing over all,” said Ryan Detrick, senior market strategist for LPL Financial.
At 11:09 a.m. ET, the Dow Jones Industrial Average was down 203.84 points, or 0.86%, at 23,421.50, the S&P 500 was down 25.58 points, or 0.90%, at 2,826.92. The Nasdaq Composite was down 81.35 points, or 0.91%, at 8,862.37.
Eight of the 11 major S&P sectors were lower with real estate and utilities posting the biggest percentage declines. Healthcare, consumer staples and energy stocks were the only ones higher.
Abbott Laboratories slipped 2.6% after the U.S. Food and Drug Administration said the company’s speedy coronavirus test could potentially be inaccurate, but can still be used to test patients.
Declining issues outnumbered advancers for a 1.10-to-1 ratio on the NYSE and a 1.06-to-1 ratio on the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 29 new highs and 11 new lows.
Reporting by Ambar Warrick and Medha Singh in Bengaluru; Editing by Shounak Dasgupta