Friday’s Stock Market Open: US Equities Fall As China Closes American Consulate In Chengdu

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

The Dow Jones Industrial Average dropped 150.38 points to 26,501.95, while the S&P 500 fell 21.33 points to 3,214.33 and the Nasdaq Composite Index tumbled 164.54 points to 10,296.88.

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.

“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 stocks now] 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.”

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 traded lower, as Britain’s FTSE-100 fell 1.36%, while France’s CAC-40 tumbled 1.37% and Germany’s DAX dropped 1.9%.

Crude oil futures rose 0.37% at $41.22 per barrel, Brent crude gained 0.28% at $43.43. Gold futures rose 0.69%.