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Stocks edge lower on Biden warning about China

Stocks edge lower on Biden warning about China

FILE PHOTO: Traders wearing masks work, on the first day of in person trading since the closure during the outbreak of the coronavirus disease (COVID-19) on the floor at the New York Stock Exchange (NYSE) in New York, U.S., May 26, 2020. REUTERS/Brendan McDermid/File Photo

NEW YORK: U.S. stocks slid on Thursday after U.S. President Joe Biden said China was poised to "eat our lunch," a warning that raised concerns for a market hovering near record highs on hopes of more stimulus, strong earnings and an improving outlook for the pandemic.

A 1.7per cent rise in PayPal Holdings Inc helped Information Technology gain 0.5per cent, the only sector on the S&P 500 and Nasdaq to rise, with all others declining.

Biden told a group of U.S. senators in a meeting to discuss the need to upgrade U.S. infrastructure that the United States must raise its game in the face of the challenge from China.

The warning about China and Democrat plans to include raising the minimum wage to US$15 in a US$1.9 trillion stimulus package showed headwinds could be on the rise, said Ed Moya, senior market analyst at OANDA in New York.

"Markets are starting to get a little bit nervous over the relations between the West and China," Moya said.

Biden's first call late Wednesday with China's President Xi Jinping "resurfaced all of the difficulties that we're going to face this year in addition to the pandemic," he said.

In addition, the Democrats are not falling in line as far as where they stand on the minimum wage, he said. "This is dragging out stimulus talks."

Mastercard rose after the credit-card company said it was planning to offer support for some cryptocurrencies on its network this year, joining a string of big-ticket firms that have pledged similar support.

Bank of New York Mellon rose about 1.0per cent after saying it had formed a new unit to help clients hold, transfer and issue digital assets, sending Bitcoin up over 8per cent to an all-time high of US$48,481.

The number of Americans filing new applications for unemployment benefits were 793,000 last week, compared to 812,000 in the prior week, but they are well below the record 6.867 million reported last March when the pandemic hit the United States.

Wall Street's main indexes have hit record highs recently on prospects of the US$1.9 trillion relief bill that aims to jump start the U.S. economy, while a largely better-than-expected earnings season also has bolstered investors' sentiment.

Analysts now expect fourth-quarter earnings for S&P 500 firms to grow 3per cent, versus forecast of a 10.3per cent drop at the beginning of January, per Refinitiv data.

"There is room for the market to take a breather but usually there is some sort of catalyst that gets that going," said Tom Martin, senior portfolio manager at Globalt Investments in Atlanta.

By 2:29PM ET, the Dow Jones Industrial Average fell 107.87 points, or 0.34per cent, to 31,329.93, the S&P 500 lost 7.03 points, or 0.18per cent, to 3,902.85 and the Nasdaq Composite dropped 8.75 points, or 0.06per cent, to 13,963.79.

The tech sector and semiconductors hit record highs, while economy-linked energy and industrials took a back seat after being in the spotlight this year.

U.S.-listed shares of cannabis companies including Tilray and Aphria reversed premarket gains to drop 42per cent and 20per cent after the sector caught the attention of Reddit-inspired retail investors this week.

Walt Disney Co was nearly flat ahead of its results after market close.

Pinterest Inc rose 7.1per cent after a report said Microsoft Corp approached the image-sharing company in recent months about a potential buyout. The negotiations were, however, currently not active, according to the report.

Declining issues outnumbered advancing ones on the NYSE by a 1.46-to-1 ratio; on Nasdaq, a 1.61-to-1 ratio favored decliners.

The S&P 500 posted 38 new 52-week highs and no new lows; the Nasdaq Composite recorded 265 new highs and seven new lows.

(Reporting by Herbert Lash, additional reporting by Medha Singh and Devik Jain in Bengaluru; Editing by Maju Samuel and Diane Craft)

Source: Reuters

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