Friday’s Stock Market Close: US Equities Drop As China-US Relations Worsen, Senate GOP Delays Relief Package

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U.S. stocks fell on Friday on worsening relations with China as Senate Republicans delayed its COVID-19 relief package.

The Dow Jones Industrial Average dropped 182.44 points to 26,469.89, while the S&P 500 fell 20.03 points to 3,215.63 and the Nasdaq Composite Index tumbled 98.24 points to 10,363.18.

For the week, the Dow slipped 0.76%.

Friday’s volume on the New York Stock Exchange totaled 3.33 billion shares with 1,013 issues advancing, 45 setting new highs, and 1,963 declining, with five stocks setting a new low .

Active movers were led by Arbutus Biopharma Corp. (ABUS), Advanced Micro Devices Inc. (AMD) and Intel (INTC).

Beijing ordered the closure of a U.S. consulate in Chengdu, in southwestern China, in retaliation for Washington’s order to shut down the Chinese consulate in Houston earlier this week.

“We won’t be surprised if there is some sell-off because investors are shifting focus back to this geo-political tension,” said Janet Mui, an investment director at Brewin Dolphin in London.

Senate Majority Leader Mitch McConnell said on Thursday that Senate Republicans will postpone the release of their COVID-19 relief plan until next week.

“The [Trump] administration has requested additional time to review the fine details, but we will be laying down the proposal early next week,” McConnell said. “We have an agreement in principle on the shape of the package.”

Some analysts think tech stocks have run up too high and due for correction.

“Concerns of another technology bubble are rising,” said Keith Lerner, chief market strategist at Truist/SunTrust Advisory. “There is also growing concentration risk, with [large-cap tech] the top five stocks now accounting for 22% of the S&P 500 Index”

But Lerner added that: “Conditions today are largely not comparable to the mania seen during the technology bubble of the late ‘90s. Absolute valuations are elevated [now]but are less than half of the levels reached back then. The rising influence of a small group of stocks is a risk for the overall market, though these same companies are also contributing an increasing amount of cash flow and profits.”

Mike Loewengart, managing director of investment strategy at E-Trade, said of the U.S. economy: “While we’re hanging on to hopes of a stimulus bill, Americans are feeling the pain of stalled reopenings and renewed shutdowns across the country.”

“We’re living in this constant state of high volatility,” said Johan Grahn, head of ETF strategy at Allianz Investment Management. “We’re surrounded by this uncertainty, not just in markets, but also around every corner of everyday life. It’s really hard to see this volatility and all the uncertainty that it implies go away anytime soon,” Grahn said.

Overnight in Asia markets finished lower, as China’s Shanghai Composite index plunged 3.86%; Japan’s Nikkei-225 fell 0.58% and Hong Kong’s Hang Seng Exchange dropped 2.21%.

In Europe markets finished lower, as Britain’s FTSE-100 fell 1.41%, while France’s CAC-40 tumbled 1.54% and Germany’s DAX dropped 1.9%.

Crude oil futures rose 0.39% at $41.23 per barrel, Brent crude slipped 0.03% at $43.31. Gold futures rose 0.53%.

The yield on the 10-year Treasury rose 1.2% to 0.589% while yield on the 30-year Treasury dropped 0.8% to 1.239%.

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