U.S. stocks closed lower on Friday, ending a four-day winning streak for major equity benchmarks, as investors worried about the deterioration in U.S.-China trade relations after a bill supporting Hong Kong protesters was signed by President Trump late on Wednesday.
The New York Stock Exchange and the Nasdaq closed early at 1 p.m. Eastern on Friday after the U.S. Thanksgiving holiday closed markets Thursday.
See: When do markets close for Thanksgiving?
What are stocks doing?
The Dow Jones Industrial Average DJIA, -0.40% retreated 112.59 points, or 0.4%, to close at 28,051.41 while the S&P 500 SPX, -0.40% slipped 12.65 points, or 0.4%, to finish at 3.140.98. The Nasdaq Composite COMP, -0.46% fell 39.7 points, or 0.5%, to end at 8.665.47.
For the week, the Dow is up 0.6%, the Nasdaq gained 1.7%, and the S&P 500 rose 1%. For the month, the S&P rose 3.4%, the Dow climbed 3.7%, and the Nasdaq gained 4.5%. This marked the biggest monthly gains for all three major equity benchmarks since June.
According to Dow Jones Market Data, trading on the NYSE during Thanksgiving week was 11.4% lower than the average of the rest of the year in 2018, while volumes on the Nasdaq were 14.5% lower.
What’s driving stocks?
Investors were concerned that a U.S. - China trade deal may be in jeopardy after President Donald Trump signed legislation supporting Hong Kong protesters. In response China summoned the U.S. ambassador to protest and warned the move would undermine cooperation with Washington.
A trade deal with China needs to be signed before the Dec. 15 deadline for a new round of import U.S. tariffs on Chinese goods.
Reuters reported that the U.S. could implement new regulations that could expand the power of authorities to block overseas shipments of American-made goods to the likes of Chinese telecoms giant Huawei Technologies, citing sources familiar to the matter.
However, a Wall Street Journal report indicates that officials in Beijing are looking to separate geopolitics from trade, and did not necessarily see the passage of the Hong Kong bill irrevocably harming the prospects for a phase one trade deal.
“We start a whole new game of calling each-other’s bluff – and one where the U.S. can see that China either doesn’t want to, or can’t, retaliate as aggressively as it threatens,” wrote Michael Every, senior strategist at Rabobank.
Earlier this week U.S. stock indexes reached new record highs on optimism about a trade deal after the Chinese Commerce Ministry said that a consensus on “properly resolving relevant issues” had been reached after U.S. trade negotiators carried out a phone call with Chinese Vice Premier Liu He.
Read: China furious, while Hong Kong celebrates after U.S. legislation
Investors were also digesting data on Black Friday holiday shopping as a test of the resilience of the U.S. consumer. Retailers have fretted that another round of import of tariffs in mid-December could slow consumer spending this year, which has helped support the U.S. economic engine against global growth headwinds.
However, online sales on Thanksgiving Day were up 20% from a year ago. Some 165.3 million Americans already have begun shopping or bargain hunting during the holiday, according to the National Retail Federation. However, retail stocks slipped Friday with the SPDR S&P Retail XRT, -0.76% off 0.4%.
Stocks in focus
Tech Data Corp. TECD, +12.32% jumped 12% on Friday after the company agreed to be bought by private-equity group Apollo Global Management APO, -0.90% Tech Data’s board unanimously accepted the amended offer of $145 a share.
Amazon.com AMZN, -0.97% and Walmart WMT, +0.28% were in focus as Black Friday holiday gets underway. With $600 million in Black Friday online sales tallied by 9 a.m. ET, according to Adobe Analytics ADBE, +0.15% Black Friday is on track to finish with $7.4 billion in sales.
Check out: $4 billion Thanksgiving haul to kick-start record holiday spending
How are other markets trading?
U.S. Treasury yields were higher Friday with the benchmark 10-year yield rising to 1.776%.
Gold for February delivery on Comex GCF20, +0.62% was up $12.20, or 0.8%, to settle at $1,465.80 an ounce. West Texas Intermediate crude futures for January delivery CLF20, -4.63% were down $2.59, or 4.5%, at $55.52 a barrel on the New York Mercantile Exchange.
Oil prices fell sharply Friday as the possible approval of a production cut extension at next week’s OPEC meeting grew more doubtful. West Texas Intermediate crude futures for January delivery CLF20, -4.63% fell $2.54, or 4.4%, at $55.58 a barrel on the New York Mercantile Exchange. January Brent crude BRNF20, +0.02%, the global marker, fell $1.60, or 2.5%, at $62.46 a barrel on ICE Futures Europe. January Brent will expire at Friday’s close.
The U.S. dollar weakened less than 0.1% against a basket of currency rivals, as measured by the ICE US Dollar index. DXY, -0.10%
In China overnight Friday, the CSI 300 Index 000300, -0.87% fell 0.9%, Japan’s Nikkei 225 NIK, -0.49% was down 0.5% and Hong Kong’s Hang Seng Index HSI, -2.03% tumbled 2%. Meanwhile, the Stoxx Europe 600 SXXP, -0.44% shed 0.4%.