Stocks fall after record drop in retail sales, U.S.-China tensions rise

Stocks fell on Friday on the back of a record plunge in U.S. retail sales and rising trade tensions between China and the U.S.
The Dow Jones Industrial Average dropped 86 points, or 0.4%. The S&P 500 slid 0.6% while the Nasdaq Composite declined by 0.8%.

U.S. monthly retail sales fell by 16.4% in April, a record. Economists polled by Dow Jones expected a decline of 12.3%. So-called core retail sales —which exclude auto, gas, food and building materials sales — dropped 15.3%.

“I guess you could say we knew it was weak,” said John Briggs, head of strategy at NatWest Markets. “The problem is you can’t dismiss all this bad news for April. If you have a deeper hole, you’re starting point is lower.”

The Trump administration has moved to block semiconductor shipments to Chinese company Huawei. The Commerce Department said it would “strategically target Huawei’s acquisition of semiconductors that are the direct product of certain U.S. software and technology.”
Meanwhile, Hu Xijin, editor-in-chief of Chinese state-run publication Global Times, tweeted on Friday that China would “restrict or investigate” U.S. companies including Qualcomm, Cisco Systems and Apple if the U.S. takes further action to block Huawei’s supply chain. Hu’s Twitter account was closely followed last year by traders looking for insight on the U.S.-China trade war.

Shares of semiconductor makers AMD, Nvidia and Skyworks Solutions all fell more than 0.8%. Apple shares slid 2.1% while Cisco and Qualcomm fell 0.8% and 5%, respectively.
The major averages were headed for their worst weekly performance since late March. The Dow and S&P 500 both ended Thursday’s session down more than 2% for the week. The Nasdaq had lost nearly 2% week to date.
Those would be the averages’ worst weekly performances since the week ending March 20. The Dow, S&P 500 and Nasdaq all fell at least 12.6%.
“Given the amount of uncertainty about this crisis that still looms, we should not be surprised by the setbacks we’ve seen in markets this week,” said Scott Knapp, chief market strategist at CUNA Mutual Group.
Weekly jobless claims for the week ending May 9 totaled nearly 3 million, according to data from the Labor Department. That brings the total number to more than 36 million since the coronavirus crisis began.
Dr. Anthony Fauci, director of the National Institute of Allergy and Infectious Diseases, said Tuesday there will be more “suffering and death” if states reopen their economies too quickly. His comments came as some states start letting nonessential businesses resume operations.
More than 4.4 million coronavirus cases have been confirmed globally, according to data compiled by Johns Hopkins University. In the U.S. alone, there have been over 1.4 million known infections.
However, Trian Partners’ Nelson Peltz said Thursday there is still value in this market, adding: “This thing is not going to last forever.”
The Dow and the S&P 500 remain more than 29% above an intraday low reached on March 23. The Nasdaq Composite has surged about 35% in that time.