Market Snapshot: Stock-index futures fall as U.S.-China trade tensions ratchet up

Market Snapshot

Chinese economy slowly recovering; U.S. retail sales data due

Shoppers explore a mostly empty mall in Columbus, Ohio, earlier this week, where several stores reopened for the first time since a shutdown of all nonessential businesses in mid-March.


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U.S. stock-index futures turned lower Friday after a report said the Trump administration was moving to block shipments of semiconductors to China’s Huawei Technologies, prompting threats of retaliation and stoking fears of renewed trade tensions as the global economy struggles to emerge from lockdowns aimed at containing the COVID-19 pandemic.

Investors also gauged a mixed round of Chinese data and looked ahead to what’s expected to be a dismal round of figures on U.S. retail sales.

What are major indexes doing?

Futures on the Dow Jones Industrial Average
YM00,
-0.91%

were down 183 points, or 0.8%, at 23,351, while S&P 500 futures
ES00,
-0.99%

dropped 21.65 points, or 0.8%, to 2,825.25. Nasdaq-100 futures
NQ00,
-1.34%

lost 63.50 points, or 0.7%, to 9,016.

The Dow Jones Industrial Average
DJIA,
+1.62%

on Thursday erased an early loss to stage an 835-point U-turn to finish with a gain of 377.37 points, or 1.6%, at 23,625.34. The S&P 500
SPX,
+1.15%

rose 32.5 points, or 1.2%, to close at 2,852.50, while the Nasdaq
COMP,
+0.90%

advanced 80.55 points, or 0.9%, ending at 8,943.72.

Stocks remained on track for weekly declines, with the Dow off 2.9% for the week, the S&P 500 down 2.6% and the Nasdaq 2% lower.

What’s driving the market?

Futures slipped after Reuters reported that the Commerce Department was moving to block shipments of semiconductors by global chip makers to China’s Huawei Technologies. The Commerce Department said it was amending an export rule to “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology,” the report said.

Global Times editor Hu Xijin, who is widely thought to have close ties to the Chinese government, said China may retaliate if the U.S. prevents microchip shipments to Huawei.

“Based on what I know, if the U.S. further blocks key technology supply to Huawei, China will activate the ‘unreliable entity list,’ restrict or investigate U.S. companies such as Qualcomm
QCOM,
+2.39%

, Cisco
CSCO,
+4.52%

and Apple
AAPL,
+0.61%

, and suspend the purchase of Boeing
BA,
+0.84%

airplanes,” he said on Twitter.

Economic data out of China showed factory output rose 3.9% in April from a year earlier, picking up after a 1.1% year-over-year contraction in March as the country continued to emerge from lockdowns imposed to combat the coronavirus epidemic. Consumer spending, however, contracted 7.5% year-over-year after a 15.8% decline in March.

“China is widely seen as the bellwether for navigating a post-lockdown world. Despite its supply-side forces faring better at present compared to demand-side indicators, it’s evident that China is only managing to tiptoe out of the lockdown gates as opposed to racing out of the blocks, even if the data does point to signs of recovery,” said Han Tan, market analyst at FXTM, in a note.

Overall. data out of China and the U.S. should put to rest the idea of a V-shaped recovery in the global economy, the analyst said.

The U.S. economic calendar features April retail sales figures at 8:30 a.m. Eastern, which are expected to show a fall of 12.5%. The figure excluding autos is expected to fall 9%, according to a MarketWatch survey of economists.

Other data on tap include the New York Federal Reserve Bank’s May Empire State Index at 8:30 a.m., while the Federal Reserve is due to release April industrial production and capacity utilization figures at 9:15 a.m. Eastern. Industrial production is forecast to slump 12.5%, while capacity utilization is expected to fall to 63.2% from 72.7% in March.

March job openings figures and a preliminary May consumer sentiment index reading are set for 10 a.m. Eastern.

Which companies are in focus?
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