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Stock-index futures lost ground early Friday, with equities undercut by worries over a deterioration in U.S.-China relations as investors awaited a news conference by President Donald Trump regarding China’s plans to impose new security laws that would curb Hong Kong’s autonomy.
Meanwhile, Federal Reserve Chairman Jerome Powell is slated to participate remotely in an event at Princeton University at 11 a.m. Eastern.
What are major indexes doing?
Futures on the Dow Jones Industrial Average YM00, -0.36% fell 83 points, or 0.3%, to 25,374, while S&P 500 futures ES00, -0.20% ES00, -0.20% were off 6.35 points, or 0.2%, at 3,031.75. Nasdaq-100 futures NQ00, +0.11% lost 17.25 points, or 0.2%, to 9,443.
The Dow DJIA, -0.57% gave up gains late Thursday after Trump announced he would hold a news conference on China, ending down 147.63 points, or 0.6%, at 25,400.64, while the S&P 500 SPX, -0.21% lost 6.40 points, or 0.2%, closing at 3,029.73. The Nasdaq Composite COMP, -0.46% lost 43.37 points or 0.5%, to end at 9,368.99.
Stocks were still on track for solid weekly gains, however. The Dow ended Thursday on track for a 3.8% weekly rise, while the S&P 500 was up 2.5% and the Nasdaq up 3.3%.
What’s driving the market?
A conflict over China’s efforts to crack down on Hong Kong and end anti-Beijing protests could undercut enthusiasm for stocks, analysts warned, but mild losses for futures indicate investors, while focused on the U.S. response, aren’t convinced U.S.-China relations are set to fall apart.
“We think it would be a significant shock to markets were Trump to announce anything that risked the phase one trade deal,” said Jasper Lawler, head of research at London Capital Group, in a note. “Revoking Hong Kong’s Special Status with the U.S. seems unlikely, It wouldn’t help the people of Hong Kong and would be a self-inflicted wound because it would just limit U.S. company access to China.”
Global equities have rallied this week, lifted by optimism over the easing of lockdowns put in place to contain the COVID-19 pandemic and historic stimulus efforts by the Federal Reserve and other central banks as well as fiscal measures by governments. While economic data remains dismal, stock-market bulls said signs of the contraction bottoming out have helped fuel gains, with investors playing down the threat of a second wave of infections later in the year.
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In U.S. political news, demonstrators clashed with police for a third straight day in Minneapolis amid protests over the death of George Floyd, a handcuffed black man who died while in police custody.
Trump reacted to the violence on Twitter, including a tweet that employed a quote from a former Miami police chief who said, “when the looting starts, the shooting starts.” Twitter on Friday flagged the tweet as having “glorified violence,” just hours after the president signed an executive order threatening to strip the company of protections against liability.
See:Trump executive order to punish social-media platforms is largely toothless, legal experts say
The U.S. economic calendar features data on personal income and consumer spending for April that’s expected to show sharp declines due to the COVID-19 lockdowns. Economists surveyed by MarketWatch, on average, look for income to show a 2.1% drop while spending is forecast to dive by 13%. The PCE core inflation gauge, the Fed’s favorite inflation measure, is expected to register a 0.3% fall.
Data on international trade in goods for April is also due at 8:30 a.m. Eastern, while the May Chicago Purchasing Managers Index is set for release at 9:45 a.m. Eastern. A final May reading on the University of Michigan’s consumer confidence index is scheduled for 10 a.m. Eastern; it’s expected to rise to 73.7 versus an April level of 71.8.
Which companies are in focus?
- Shares of social-network companies were expected to remain in focus. Shares of Twitter Inc. TWTR, -4.44% were off 0.3% in premarket action, after a drop of more than 4% on Thursday. Facebook Inc. FB, -1.60% shares were up 0.1%.
- Shares of Salesforce.com Inc. CRM, +2.54% were 2.9% lower in premarket action. The enterprise-content platform late Thursday reported fiscal first-quarter results that were largely in line with Wall Street estimates but offered guidance that fell short.
- Costco Wholesale Corp. COST, +1.16% shares were 2% lower ahead of the bell after the retailer late Thursday delivered results that missed Wall Street expectations for its fiscal third quarter, during which it spent nearly $300 million in wages and extra sanitation amid the coronavirus pandemic.
- Shares of Dell Technologies Inc. DELL, +0.02% were up nearly 6% in premarket trade after it announced following Thursday’s close that the COVID-19 pandemic has boosted its business in certain sectors.
- Cisco Systems Inc. CSCO, -0.79% late Thursday announced plans to acquire ThousandEyes, a security-software company, reportedly for close to $1 billion. San Francisco-based ThousandEyes has raised more than $100 million in venture capital to develop software that monitors how a company’s applications are being used on the internet. Shares were up 0.3% in premarket trade.
