A Chinese and U.S. flag at a booth during the first China International Import Expo in Shanghai, November 6, 2018.
Johannes Eisele | AFP | Getty Images
Stock futures slipped early Friday morning as traders braced for an upcoming news conference on U.S.-China relations from President Donald Trump.
Trump said Thursday afternoon he would hold the news conference, knocking stocks down from solid gains. That announcement came after China approved a national security bill for Hong Kong that experts warn could endanger the city’s “one party, two systems” principle. That principle allows for additional freedoms that mainland China residents don’t have.
Tensions between China and the U.S. have risen lately as Trump criticizes the Chinese government’s response to the coronavirus outbreak. U.S. lawmakers have also been critical of China increasing its stronghold over Hong Kong.
Paul Christopher, head of global market strategy at Wells Fargo, said he expects more rhetoric from the U.S. regarding Hong Kong and China, noting: “It could end up being a headwind once the market finishes pricing in all of this hopium.”
Futures also fell after Salesforce issued disappointing guidance for the second quarter. The company expects earnings ranging between 66 cents a share and 67 cents a share. Analysts polled by FactSet expected earnings guidance of 74 cents per share. Salesforce shares dropped 4%.
The Dow closed Thursday’s session down nearly 150 points, or 0.6%. The S&P 500 and Nasdaq Composite lost 0.2% and 0.5%, respectively.
Despite those losses, the major averages remained on pace for solid weekly gains. The Dow and S&P 500 are up more than 2.7% each week to date while the Nasdaq has advanced 0.5%.
That weekly advance comes as traders increase bets on a successful reopening of the economy.
“The market has discounted the coronavirus very quickly and has correctly predicted the apex of the virus,” said Mike Katz, partner at Seven Points Capital. “Having said all that, prices are up there. The S&P 500 trading above 3,000 is pricing in a full recovery.”
“If there is a second wave of the virus that ends up being more detrimental than people think, then I would think the S&P 500 is not valued correctly,” said Katz.
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