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

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(C) Reuters. FILE PHOTO: The Wall Street sign is pictured at the New York Stock exchange (NYSE) in the Manhattan borough of New York City

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By Noel Randewich

(Reuters) – Wall Street ended 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.

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.

Late in the session, stocks edged lower after the U.S. Commerce Department said it was adding 33 Chinese companies and other institutions to an economic blacklist for human rights violations and to address U.S. national security concerns.

The increasing rhetoric between Washington and Beijing has knocked Wall Street off multi-month highs, although the three main indexes still all rose around 3% for the week, fueled by optimism about an eventual coronavirus vaccine and the easing of virus-related curbs.

“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,” said Eric Freedman, chief investment officer at U.S. Bank Wealth Management.

U.S. stock exchanges will be closed on Monday for the Memorial Day holiday.

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

The S&P 500 real estate sector index jumped 2.2%, leading the 11 sectors, while energy dropped 0.7% as oil prices sank about 3%. [O/R]

A 1.9% drop in Chevron (NYSE:CVX) weighed on the Dow.

The Dow Jones Industrial Average fell 0.04% to end at 24,465.16 points, while the S&P 500 gained 0.24%, to 2,955.45. The Nasdaq Composite climbed 0.43% to 9,324.59.

For the week, the Dow added 3.3%, the S&P 500 rose 3.2%, and the Nasdaq climbed 3.4%.

Mixed earnings from retailers Walmart (NYSE:WMT) Inc, Best Buy Co Inc (NYSE:BBY) and Home Depot Inc (NYSE:HD) 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 (NYSE:BABA) Group reported better-than-expected quarterly profit, but its shares tumbled almost 6%. Smaller rival Pinduoduo (NASDAQ:PDD) Inc’s U.S.-listed shares surged over 14% after the company posted upbeat results.

Nvidia (NASDAQ:NVDA) climbed 2.9% after forecasting strong quarterly revenue as demand surges for its data center chips.

KKR & Co rose 1.1% 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 (NASDAQ:SPLK) Inc jumped over 12% after it said it expects more demand for its cloud services.

Volume on U.S. exchanges was 8.75 billion shares, compared to the 11.2 billion average for the last 20 trading days.

Advancing issues outnumbered declining ones on the NYSE by a 1.17-to-1 ratio; on Nasdaq, a 1.30-to-1 ratio favored advancers.

The S&P 500 posted six new 52-week highs and no new lows; the Nasdaq Composite recorded 62 new highs and nine new lows.