US stocks drop after China escalates tensions with consulate order

  • US stocks slipped on Friday after China ordered the closure of the US’s consulate in Chengdu, ratcheting up tensions between the economic superpowers.
  • The escalation comes after the US made a similar order on Wednesday and revived fears of a tit-for-tat economic conflict.
  • Investors also weighed earnings misses from Intel and American Express.
  • Oil gained as reopenings abroad boosted hopes for a demand rebound. West Texas Intermediate crude climbed as much as 1.5%, to $US41.67 per barrel.
  • Watch major indexes update live here.

US equities fell on Friday after China fired back in its latest international tit-for-tat and ordered the US to close its consulate in Chengdu.

The escalation comes two days after the US called on China to close its own consulate in Houston. Though the economic superpowers enjoyed months of relative peace, the latest tensions ratchet up concerns of US-China relations souring amid an already weakened global economy.

Here’s where US indexes stood shortly after the 9:30 a.m. ET market open on Friday:

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Investors also mulled gloomy earnings news at the start of the session. Intel sank after warning of delays to its next-generation chips and missing expectations for next-quarter figures. American Express shares slumped after the company’s quarterly revenue fell below estimates.

Major tech stocks turned lower as well, further cutting into the Nasdaq composite’s lead over its peers. Amazon,Microsoft, and Apple all tumbled in early trading.

Oil traded higher as reopenings abroad prop up demand. West Texas Intermediate crude gained as much as 1.5%, to $US41.67 per barrel. Brent crude, the international standard, climbed 1.4%, to $US43.90 per barrel, at intraday highs.

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Economic data detailing the US’s recovery has fallen short of hopes in recent weeks. Jobless claims for the week ended on Saturday reached 1.42 million, the Labour Department announced Thursday. The reading marks the first increase in claims in 15 weeks and landed above the consensus economist estimate of 1.3 million.

The last trading session of the week follows a hefty decline on Thursday. The Dow tumbled more than 350 points as investors first digested the uptick in unemployment claims and the continued spread of coronavirus in the US. Wall Street has also watched Congress closely for any signs of a second stimulus bill reaching passage.

While both parties have agreed on key facets including a second round of stimulus checks and nixing a payroll tax cut, legislators remain mired in negotiations. Several financial sector leaders have urged Congress to fast-track the legislation, warning that the months-end expiration of expanded unemployment benefits could give way to a wave of defaults.

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