Dow Falls Nearly 200 Points After China Retaliates By Ordering Shutdown Of Chengdu Consulate

TOPLINE

The market finished lower on Friday as shares of big tech lagged, with stocks also taking a hit after China retaliated to the closure of its consulate in Houston earlier this week by ordering the U.S. to close its consulate in Chengdu.

KEY FACTS

The Dow Jones Industrial Average was down 0.7%, nearly 200 points, on Friday, while the S&P 500 fell 0.6% and the tech-heavy Nasdaq Composite 0.9%.

The market took a hit from worsening U.S.-China tensions, which hit a low point after Beijing ordered the closure of a U.S. consulate in Chengdu on Friday.

China’s Foreign Ministry claimed that the order was a “legitimate and necessary” response to the Trump Administration’s decision to shut down the Chinese consulate in Houston earlier this week.

Big tech stocks, meanwhile, continued to decline and dragged the market lower for a second day in a row: Facebook, Apple and Microsoft all fell.

Shares of Intel tanked over 16% after the company, despite beating earnings and revenue estimates last quarter, indicated that it expects further delays in its next-generation chips.

Crucial quote

“While traders couldn’t get enough of big tech last week, they cant get away from it fast enough this week,” Bespoke Investment Group said in a recent note.

Surprising fact

Spot gold traded higher than $1,900 for the first time since 2011. Investors have rushed to safe-haven assets like gold amid continued uncertainty around the coronavirus pandemic and U.S.-China tensions.

What to watch for

Republicans in Congress are expected to unveil a new coronavirus relief plan early next week. With the extra $600 a week in federal unemployment benefits set to expire by the end of July, lawmakers in Washington are scrambling to agree on the next round of coronavirus aid. The next round of stimulus is likely include a second round of stimulus checks, more money for PPP small business loans and funding for schools in the fall.

Further reading

Apple, Microsoft, Amazon, Google And Facebook Make Up A Record Chunk Of The S&P 500. Here’s Why That Might Be Dangerous (Forbes)

Dow Plunges 350 Points After Another 1.4 Million Americans File For Unemployment (Forbes)

Dow Rises 150 Points Amid Renewed U.S.-China Tensions, Pfizer Vaccine Deal (Forbes)

We Looked At How The Stock Market Performed Under Every U.S. President Since Truman — And The Results Will Surprise You (Forbes)

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