Stocks - Dow Notches Two-Month Winning Streak as Trump Stops Short on China

By Yasin Ebrahim 

Investing.com – The Dow cut its losses on Friday, capping off its second-straight month of gains as President Donald Trump said the U.S. would end Hong Kong's special treatment but stopped short of imposing new sanctions on China, keeping the U.S.-Sino trade truce intact. 

The Dow Jones Industrial Average ended flat, the S&P 500 rose 0.48%, while the Nasdaq Composite was up 1.29%.

In retaliation for China's move to impose a new national security law on Hong Kong that cracks down on public demonstrations, Trump said the U.S. would take measures to revoke Hong Kong’s special trade status with the United States that grants it favorable terms across trade, financial transactions and immigration. 

Under the new law, Beijing has violated its pledge to ensure Hong Kong retains its high degree of autonomy that has allowed the city to receive special status from the U.S., Trump said.

The reaction in the market was one of relief as investor fears were high heading into the press conference amid reports Trump was considering tougher measures, including sanctions on Beijing.

Trump also continued to blame China for the coronavirus pandemic, the impact of which continues to drag on U.S. economic growth.   

The consumer, the backbone of the economy, reined in spending like never before in April, as shuttered businesses limited consumer opportunities to spend.

Consumer spending fell 13.6% to in April, the steepest since records began, the Commerce Department reported Friday. But some are optimistic the reopening of the economy will trigger a rebound in the coming months as personal savings surged by a record 33%.

"The savings cushion will provide much-needed support for consumer spending as the economy begins to reopen," Jefferies (NYSE:JEF) said in a note.

Monetary policy was also in focus as Federal Reserve Jerome Powell confirmed that the central bank is just days away from rolling out its Main Street lending facility. Powell also reiterated the negative interest rates are not in the Fed's toolbox as the evidence over its efficacy remains “ambiguous".

In tech, meanwhile, Twitter (NYSE:TWTR) remained in focus, down 2.8% after Trump signed an executive order late Thursday that aimed to weaker the legal protections for social media platforms.

Healthcare stocks were in favor as investors continue to up bets on drugmakers in the race of the coronavirus cure, with Moderna (NASDAQ:MRNA) up 10.7% and Gilead Sciences (NASDAQ:GILD) up 3.3%.