US STOCKS-Wall St dips as U.S.-China tensions add to economic woes

  • Reuters
  • Stock Market News
US STOCKS-Wall St dips as U.S.-China tensions add to economic woes
Credit: © Reuters.

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* Indexes set to gain between 2.5% to 2.8% for the week

* Alibaba (NYSE: BABA ) slips despite upbeat earnings report

* Splunk jumps after forecasting higher cloud demand

* Indexes fall: Dow 0.56%, S&P 0.33%, Nasdaq 0.19% (Adds details, comments, updates prices)

By Ambar Warrick and Pawel Goraj

May 22 (Reuters) - U.S. stock indexes dropped on Friday as Sino-U.S. tensions weighed on markets struggling to gauge the pace of economic recovery from the coronavirus.

President Donald Trump's statement on China's plan for a national security law in Hong Kong on Thursday raised concerns over Washington and Beijing possibly reneging on their Phase-1 trade deal. of a renewed trade war cut short Wall Street's April rally that was powered by optimism over a potential COVID-19 vaccine and the U.S. economy gradually emerging from the lockdowns.

The three main U.S. stock indexes have kept to a tight range in May, but are still on course for weekly gains between 2.5% and 2.8%.

"It's a bit of a push-pull as there's some positive news from a healthcare perspective at least, but then we also have the rhetoric ramping up with China," said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.

"Investors may be a little bit nervous, may pull in their horns ahead of a three-day weekend."

At 11:23 a.m. ET, the Dow Jones Industrial Average .DJI was down 137.22 points, or 0.56%, at 24,336.90, the S&P 500 .SPX was down 9.75 points, or 0.33%, at 2,938.76 and the Nasdaq Composite .IXIC was down 18.07 points, or 0.19%, at 9,266.81.

Eight of the 11 major S&P 500 sub-indexes were trading lower, led by energy .SPNY as oil prices sank 5%. O/R

Real Estate stocks were up in some defensive plays, while losses were limited in the consumer staples sector.

Mixed retail earnings from Walmart (NYSE: WMT ) Inc WMT.N , Best Buy Co Inc (NYSE: BBY ) BBY.N and Home Depot Inc (NYSE: HD ) HD.N earlier in the week had shown online shopping gaining traction due to the stay-at-home orders, a trend that could damage brick-and-mortar players.

On Friday, Chinese e-commerce giant Alibaba Group BABA.N reported better-than-expected quarterly profit, but its shares slipped 4.4%. Smaller rival Pinduoduo Inc's U.S.-listed shares PDD.O gained 9.6% after posting upbeat earnings report. Packard Enterprise HPE.N fell 11.5% after missing second-quarter revenue and profit estimates, hit by global lockdowns since February. analytics software maker Splunk Inc SPLK.O rose 10.7% after saying it expects higher demand for its cloud services as people around the world take to working from home. issues outnumbered advancers 1.9-to-1 on the NYSE and nearly matched them on the Nasdaq.

The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 37 new highs and six new lows.

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