Stocks end mixed, but rise on the week, as US-China tensions mount
Stocks ended little changed Friday,
Paring earlier losses as ongoing signs of the economic damage from the coronavirus pandemic compounded with fears of rising U.S.-China tensions. A slew of quarterly corporate earnings results came in mixed.
Each of the three major U.S. equity indices ( DOW JONES, S&P 500 and NASDAQ) posted weekly advances of about 3%.
Concerns that relations with China could become increasingly strained flared up Friday, with U.S. senators introducing a bipartisan bill that would sanction Chinese officials and organizations who enforce newly introduced security measures in Hong Kong. This came after the Senate passed a bill that would make it more difficult for Chinese companies to list on U.S. stock exchanges. All three major indices ended the regular session lower.
Overnight, Chinese officials at their National People’s Congress in Beijing declined to provide an annual gross domestic product (GDP) target for the country’s economic growth for the first time since the practice began about three decades ago, underscoring the economic impact from the coronavirus pandemic.
China’s quarterly GDP growth turned negative for the first time on record in the first three months of the year, declining 6.8%.
“The long fat tail in the profile of job losses during this pandemic suggests that layoffs are no longer just because of the economy shutting down and a backlog of claims being processed,” Torsten Slok, chief economist at Deutsche Bank Securities, said in a note.
“Instead, the fact that we still lost 2.4mn [million] jobs last week after nine weeks of COVID-19 suggests that what is going on is a more permanent reallocation of workers away from jobs in industries that require a high degree of face-to-face and close physical interaction,” he added.
In commentary Thursday,New York Fed President John Williams said he forecasted “a couple very difficult months ahead of us,” and Fed Vice Chairman Richard Clarida also said he believed the “net effect” of the pandemic would be “for aggregate demand to decline relative to aggregate supply, both in the near term and over the medium term.”