Wall Street mixed as China-U.S. tensions weigh

Wall Street was mixed on Friday in a mostly tame finish to a week of strong gains, as investors gauged China-U.S. tensions and amid ongoing uncertainty about the pace of economic recovery from the coronavirus.

FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City, New York, U.S., March 9, 2020. REUTERS/Carlo Allegri/File Photo

President Donald Trump’s warning on Thursday that the U.S. would react strongly to China’s plan for a national security law in Hong Kong has raised concerns over Washington and Beijing’s possibly reneging on their Phase 1 trade deal.

The rhetoric knocked Wall Street off multi-month highs, although the main indexes were still set to add over 2% for the week, fueled by optimism about an eventual coronavirus vaccine and the easing of virus-related curbs.

“The biggest thing out there today is the Hong Kong/China saber rattling,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management. “We still think COVID-19 concerns are in the driver’s seat, but we could see U.S.-China relations move back into the front seat.”

The Nasdaq index is down about 5% from its Feb. 19 record high, helped in recent weeks by gains in Microsoft , Amazon and other heavyweight companies seen coming out of the economic downturn stronger than their smaller rivals.

At 2:17 p.m. ET, the Dow Jones Industrial Average was down 0.11% at 24,446.31 points, while the S&P 500 gained 0.14% to 2,952.58. The Nasdaq Composite added 0.36% to 9,318.50.

Six of the 11 major S&P 500 sector indexes were lower, with energy dropping more than 1% as oil prices sank 5%. [O/R]

Mixed earnings from retailers Walmart Inc, Best Buy Co Inc and Home Depot Inc earlier this week showed online shopping gaining traction with the lockdown orders, a trend that could damage brick-and-mortar players already feeling pressure from internet rivals.

On Friday, Chinese e-commerce giant Alibaba Group reported better-than-expected quarterly profit, but its shares tumbled almost 6%. Smaller rival Pinduoduo Inc’s U.S.-listed shares surged 11% after the company posted upbeat results.

Nvidia rose 2.8% after forecasting strong quarterly revenue as demand surges for its data center chips.

KKR & Co rose 0.9% after India’s Reliance Industries said the private equity firm would buy a 2.3% stake in its digital unit for 113.67 billion rupees ($1.50 billion).

Data analytics software maker Splunk Inc jumped 12% after it said it expects more demand for its cloud services.

Declining issues outnumbered advancing ones on the NYSE by a 1.11-to-1 ratio; on Nasdaq, a 1.03-to-1 ratio favored decliners.

The S&P 500 posted five new 52-week highs and no new lows; the Nasdaq Composite recorded 52 new highs and eight new lows.

Reporting by Noel Randewich in Oakland, California; Additional reporting by Ambar Warrick in Bengaluru and Pawel Goraj in Gdansk; Editing by Leslie Adler