U.S. stocks slid lower Friday, closing out a second week of losses, as investors weighed a report that the Trump administration is considering potential curbs on U.S. portfolio investments into China.
Investors also kept an eye on U.S. mixed economic data and the geopolitical implications of whistleblower complaint against President Donald Trump who is facing an impeachment inquiry in Congress.
What are major indexes doing?
The Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.43% lost 70.87 points or 0.26%, to 26,820.25, while S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.37% lost 15.83 points, or 0.53%, to trade at 2,961.79. The Nasdaq Composite Index /zigman2/quotes/210598365/realtime COMP -0.05% gave up 91.03 points, or 1.13%, at 7,939.63.
The Dow on Thursday gave up 79.59 points, or 0.3%, to end at 26,891.12, while the S&P 500 lost 7.25 points or 0.2%, to finish at 2,977.62. The Nasdaq closed at 8,030.66, down 46.72 points, or 0.6%.
For the week, the Dow shed 0.43%, the S&P 500 retreated 1.01%, while the Nasdaq lost 2.19%.
What’s driving the market?
The Trump administration has been discussing ways to curb U.S. portfolio inflows into China, according to Bloomberg News , a crackdown that could hit billions worth of investments and escalate the Sino-American trade war.
U.S. stocks retreated as investors studied the potential impact of the news, which could signal a significant ratcheting up of U.S.-China tensions ahead of planned talks in mid-October over trade issues.
“It’s going to be watch-and-see,” said Marc Pfeffer, Chief Investment Strategist at CLS Investment, adding that any plans by Trump to impinge on U.S. flows of capital into China’s market would be a “dangerous foray into a totally different venue” of the ongoing U.S.-China dispute.
But Pfeffer also cautioned that Trump officials simply might be looking for leverage against China ahead of scheduled trade negotiations, particularly at a time when he could appear weakened by the impeachment proceedings.
Shares of New York listed Chinese bellwether Alibaba Group Holdings, Inc. /zigman2/quotes/201948298/composite BABA +0.10% lost 5.15%, while Baidu, Inc. /zigman2/quotes/209050136/composite BIDU +1.09% gave up 3.67%. Both are considered barometers for Chinese stocks that trade in the U.S.
In early trade, stocks were up following a CNBC report that top U.S. and Chinese negotiators are set to meet Oct. 10-11 in Washington , with Chinese Vice Premier Liu He to lead the delegation from Beijing. Also, news reports said Chinese officials have talked about increased purchases of U.S. goods.
On Thursday, the weaker tone was tied in part to a news report that the Trump administration was unlikely to extend a waiver that allows U.S. companies to make sales to China telecom firm Huawei, potentially stoking trade tensions. Skeptics said they still need convincing after numerous swings between conciliation and escalation over the course of the U.S.-China trade battle stretching back to spring of last year.
The sudden twist on the trade front likely came as no surprise to investors who had taken initial optimism over the October meeting plans with a grain of salt.