Stocks cut gains as tech shares decline, China tensions rise

Stocks pared gains Wednesday as major tech heavyweights pared some of their advances from the past several weeks. The Nasdaq led declines among the three major indices.

A rising threat of heightened tensions with China also weighed on investors. Wednesday morning, Secretary of State Mike Pompeo said the U.S. certified that Hong Kong was no longer political autonomous from China, following new national security measures from Beijing that would encroach on the region. Pompeo’s remarks carry major implications for Hong Kong’s previous special trading status with the U.S., and China has previously threatened to retaliate if the U.S. stepped in over Hong Kong.

A day earlier, Bloomberg reported that U.S. officials were considering sanctioning Chinese officials and entities enforcing the national security law.

These developments add to mounting tensions between the U.S. and China, with relations already strained as the past years’ trade war played out and the coronavirus pandemic that began in China spread across the world.

Also on Wednesday, the U.S. House of Representatives closed in on passing legislation already cleared by the Senate that would give authority to impose sanctions on Chinese officials for human rights abuses against Muslim minorities in China, in another move that could spark the ire of Chinese officials.

Meanwhile, more positive economic data showing stabilizations in U.S. consumer confidence and a rebound in the housing market April helped push stocks higher earlier this week. Wednesday’s weekly mortgage applications report showed mortgages for home purchases rose on a weekly basis for a sixth straight week, and to the highest level since mid-March.

Some analysts have struck a more cautious tone on the direction of the stock market in the very near-term, however, even as conditions improve off last month’s lows.

“While I do think we’re going to 30,000 [on the Dow] next year, and 40,000 by 2023, I don’t think this is the beginning of the run to new highs, right here,” Paul Schatz, president of Heritage Capital told Yahoo Finance’s On the Move. “I think we need some pause and digestion first.”

12:04 p.m. ET: Stocks cut gains after Pompeo says Hong Kong is no longer autonomous from China

Here were the main moves in markets, as of 12:04 p.m. ET:

  • S&P 500 (^GSPC): +6.65 points (+0.22%) to 2,998.97

  • Dow (^DJI): +250.11 points (+1.00%) to 25,245.22

  • Nasdaq (^IXIC): -75.98 points (-0.81%) to 9,263.87

  • Crude (CL=F): -$1.58 (-4.6%) to $32.77 a barrel

  • Gold (GC=F): -$8.90 (-0.52%) to $1,696.70 per ounce

  • 10-year Treasury (^TNX): -0.2 bps to yield 0.677%

11:38 a.m. ET: Pompeo says Hong Kong ‘no long autonomous from China’

Secretary of State Mike Pompeo said Hong Kong no longer maintained its autonomy, “given facts on the ground,” he said in a Twitter post Wednesday morning.

“Hong Kong does not continue to warrant treatment under United States laws in the same manner as U.S. laws were applied to Hong Kong before July 1997,” Pompeo said in a statement, according to multiple media reports. “No reasonable person can assert today that Hong Kong maintains a high degree of autonomy from China, given facts on the ground.”

10:00 a.m. ET: Richmond Fed Manufacturing index recovers from record low in May

The Richmond Federal Reserve’s regional manufacturing index rose from a record low of -53 in April to a better than expected reading of -27 in May. Consensus economists expected the index, which tracks regional manufacturing activity, to hold lower at -40 for the month.

Still, May’s reading marked the lowest level since 2009.

“All three components — shipments, new orders and employment — were above their April readings but still in contractionary territory,” the Richmond Fed said in a statement. “The index for local business conditions was also negative, but contacts expected conditions to improve in the next six months.”

”Many survey participants reported decreases in employment and the average workweek in May,” it added. “However, the indexes for wages and the availability of workers with the necessary skills were both close to 0. Respondents expected to see increases in both wages and available skills in the coming months.”

9:32 a.m. ET: Stocks open higher

Here were the main moves in markets, as of 9:32 a.m. ET:

  • S&P 500 (^GSPC): +28.5 points (+0.95%) to 3,020.27

  • Dow (^DJI): +321.08 points (+1.28%) to 25,316.19

  • Nasdaq (^IXIC): +21.46 points (+0.2%) to 9,358.59

  • Crude (CL=F): -$0.80 (-2.33%) to $33.55 a barrel

  • Gold (GC=F): -$18.50 (-1.08%) to $1,687.10 per ounce

  • 10-year Treasury (^TNX): +0.2 bps to yield 0.7%

7:27 a.m. ET Wednesday: Stock futures add to gains

Here were the main moves in markets as of 7:27 a.m. ET:

  • S&P 500 futures (ES=F): 3,026.75, up 32.35 points (+1.08%)

  • Dow futures (YM=F): 25,345.00, up 343 points (+1.37%)

  • Nasdaq futures (NQ=F): 9,451.25, up 44.75 points (+0.48%)

  • Crude (CL=F): -$0.48 (-1.4%) to $33.81 a barrel

  • Gold (GC=F): -$8.30 (-0.49%) to $1,697.30 per ounce

  • 10-year Treasury (^TNX): +2 bps to yield 0.718%

7:27 a.m. ET Wednesday: Mortgages for home purchases rise for sixth straight week

An index tracking mortgage applications for home purchases rose 9% over last week for the week ending May 22, seasonally adjusted, the Mortgage Bankers Association said in its weekly report Wednesday. This marked the sixth straight advance for the index, and a jump of 54% since early April, when the coronavirus pandemic and social distancing measures were at their peak and led to a slu,p in housing market activity. The unadjusted index for purchases also rose 9% versus the same period last year.

“The home purchase market continued its path to recovery as various states reopen, leading to more buyers resuming their home search,” Joel Kan, MBA’s associate vice president of economic and industry forecasting, said in a statement.

An index tracking refinances declined 0.2% from the previous week, but was still 176% higher from the same week a year ago. Taken together, the composite index tracking both refinances and purchases rose 2.7%, seasonally adjusted, from a week earlier.

6:05 p.m. ET Tuesday: Stock futures open little changed

Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:05 p.m. ET:

  • S&P 500 futures (ES=F): 2,992.25, down 2.25 points (-0.08%)

  • Dow futures (YM=F): 24,993.00, down 9 points (-0.04%)

  • Nasdaq futures (NQ=F): 9,407.25, up 0.75 points (+0.01%)

NEW YORK, NEW YORK – MAY 26: Traders walk into the New York Stock Exchange (NYSE) on the first day that traders are allowed back onto the historic floor of the exchange on May 26, 2020 in New York City. While only a small number of traders will be returning at this time, those that do will have to take temperature checks and wear face masks at all times while on the floor. The Dow rose over 600 points in morning trading as investors see economic activity in America picking up (Photo by Spencer Platt/Getty Images)

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