Dow drops, Trump China press conference looms, stocks still up for week

Fauci says virus vaccine still a ways off

The decline in the U.S. stock market on Friday was broad, but modest as tensions between the U.S. and China, as well as an upcoming press conference hosted by President Trump, dampened an otherwise strong week. The Dow and S&P 500 are on track to finish the week up 3.2% and 2%, respectively.

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12:01 pm: Markets at midday: Dow and S&P 500 fall, but headed for weekly and monthly gains

Around midday, the Dow and S&P 500 traded slightly lower ahead of a key news conference from President Donald Trump. The Dow fell 180 points, or 0.7%, while the S&P 500 dipped 0.4%. Despite those losses, both averages were up sharply for the week and the month. —Imbert

12 pm: Powell says Fed is ‘not close’ to a limit for policy tools

Fed Chairman Jerome Powell said in a webinar event for Princeton University that the central bank would have the tools for more monetary assistance if the country is hit by a second wave of Covid-19. “We of course would continue to react. We’re not close to any limits that we might have,” Powell said. Powell also said that risks to inflation were to the downside. —Pound

11:35 am: Powell: Fed is ‘days away’ from making first loans to Main Street

Fed Chairman Jerome Powell said the central bank was “days away” from making its first loans to medium-sized businesses. Those loans are part of the Fed’s $600 billion “Main Street” Lending Facility, which is designed to help businesses amid the coronavirus pandemic. “It’s far and away the biggest challenge of any facilities we have set up,” Powell said. —Imbert, Liesman

11:30 am: Powell says committed to doing ‘whatever we can’

“The Fed is strongly committed to using our tools to do whatever we can for as long as it takes to provide some relief and some stability now to support the recovery when it comes, and to try to avoid the longer-run damage to peoples’ lives through long unemployment or to their businesses through unnecessary insolvencies,” Powell said. —Stevens

11:26 am: Powell says coronavirus an ’emergency’ of a nature not seen before

Speaking at Princeton University on Friday, Federal Reserve Chairman Jerome Powell said that the coronavirus represents an emergency in a class of its own. “This is an emergency of a nature that we haven’t really seen before,” the central bank chief said. Powell added that the response from the Federal Reserve had to be unique to combat the economic devastation wrought by the pandemic. “We crossed a lot of red lines that had not been crossed before, and I’m very comfortable that this is a situation where you do that and then you figure it out afterwards,” he said. –Stevens

11 am: Powell set to speak

Federal Reserve Chairman Jerome Powell is set to speak at 11 am ET virtually in a Princeton University event with Alan Blinder, former Fed vice chairman. Investors will pore through Powell’s comments for clues about where the economy stands amid the coronavirus pandemic and the measures the Fed could take to further support the economy.

Click here to watch. —Imbert

10:51 am: Cramer says without more coronavirus stimulus the stock market rally may run out of steam

The stock market run-up from its March lows could “sputter out” without more coronavirus economic stimulus from Congress, CNBC’s Jim Cramer said Friday. “I get worried,” the “Mad Money” host added, warning that record high unemployment is “eventually going to catch up to the market.” Earlier this month, House Democrats passed another massive relief package. However, the $3 trillion bill has been a nonstarter in the GOP-led Senate. Cramer said another round of stimulus could act as a “bridge” to a Covid-19 vaccine so that more businesses don’t have to close. —Stankiewicz

10:49 am: NYSE decliners lead advancers 2-1 

About two stocks traded lower for ever advancer on the New York Stock Exchange on Friday as investors looked ahead to a key news conference from President Donald Trump. Overall, 1,864 NYSE-listed stocks were down while about 900 advanced, FactSet data shows. —Imbert

10:25 am: Twitter flags Trump tweet for ‘glorifying violence’

Twitter flagged a tweet from President Donald Trump for violating the company’s guidelines about “glorifying violence.” The move comes after the social media giant fact-checked Trump earlier this week for a tweet about mail-in ballots and voter fraud. Trump then targeted social media companies with an executive order aimed at cracking down on “censorship” by social media companies. Twitter shares fell 2.6%. — Imbert

10 am: Consumer sentiment rises to 72.3 in May, but fails to meet forecasts

The University of Michigan said Friday that its consumer sentiment index rose to 72.3 in May from 71.8 in April. Though the print suggests that Americans felt slightly more optimistic this month than they did in April, the figure failed to meet what economists polled by Dow Jones had expected, a reading of 74. Americans remain historically conservative with their personal income given the ongoing Covid-19 concerns and government rules to contain its spread, but some may be feeling a bit more hopeful given that some states have begun to ease business-closure restrictions over the last few weeks. — Franck

9:57 am: Here are Friday’s biggest analyst calls of the day: Lululemon, Bloomin’ Brands, Slack & more

  • Raymond James raised its price target on Lululemon to a Street high $335 from $250.
  • Jefferies upgraded Bloomin’ Brands to buy from hold.
  • Stephens raised its price target on Slack to $37 from $32.
  • Baird initiated Waste Management as outperform.
  • Credit Suisse initiated S&P Global and Moody’s as outperform.
  • Argus downgraded VF Corp to hold from buy.
  • Cowen downgraded Halliburton to market perform from outperform.

Pro Subscribers read more here: — Bloom

9:50 am: Energy and financials lag, tech and health care outperform amid U.S.-China angst

Stocks with outsized exposure to global markets underperformed the major indexes 20 minutes into Friday’s regular trading as tensions between the U.S. and China kept investors huddled in safer bets like tech and health care. Boeing and Caterpillar, which both derive a significant portion of their revenues overseas, had the most downward pressure on the Dow with declines of 2.1% and 1.6%, respectively. Microsoft and UnitedHealth added the most upside, but failed to totally offset the Dow’s fall of about 60 points. — Franck

9:30 am: Stocks open mostly lower as traders await Trump’s China briefing

U.S. stocks opened mostly lower on Friday with the Dow Jones Industrial Average down 140 points and the S&P 500 losing 0.35%. The Nasdaq Composite was the lone gainer among the three indexes, up a hair above flatline. Traders cited brewing U.S.-China tensions, as well as an anticipated press briefing on the matter by President Donald Trump, for the late-week selling. The president is expected to condemn a few of Beijing’s recent actions, including its handling of the Covid-19 outbreak, its interference in Hong Kong’s government and its treatment of Muslim minority groups. — Franck

9:25 am: Kudlow says in an interview that the U.S. government is ‘furious’ with China

President Donald Trump’s top economic advisor Larry Kudlow said in an interview Friday morning that the U.S. government is “furious” with the way China has behaved in recent weeks in its handling of the coronavirus outbreak and its interference with the autonomy of Hong Kong. “Regarding Hong Kong, China is now violating a 50-year-old treaty,” Kudlow told the Fox News Channel from the White House. “Frankly, the U.S. government is … I’ll use the word furious at what China has done in recent days, weeks and months. They have not behaved well and they have lost the trust, I think, of the whole Western world.”

Trump is expected to host a press conference later Friday to condemn Beijing’s recent behavior. — Franck

9:23 am: U.S. savings rate hits record high amid coronavirus crisis

Americans are saving more than ever before as the coronavirus has the U.S. fearing about the future of the economy. The personal savings rate hit a historic 33% in April, the U.S. Bureau of Economic Analysis said Friday. The rate represents how much people save as a percentage of their disposable income. April’s print is by far the highest since the department started tracking in the 1960’s, and surpasses consumer savings when the U.S. was embroiled in the financial crisis. The increase in savings came as spending declined by a record 13.6% for the month. The deadly virus, which has caused more than 40 million Americans to file for unemployment, has paralyzed consumer spending habits. – Fitzgerald

8:48 am: Corporation raise $1 trillion in debt issuance

Corporate debt issuance has surpassed $1 trillion as companies borrow money at double the pace of last year as the Federal Reserve moves to backstop the corporate credit market amid the coronavirus pandemic. Of the $1.038 trillion in new issuance, over $700 billion of new debt rolled out since the Fed announced it would support the corporate bond market. —Imbert, Domm

8:43 am: U.S. personal spending plummets 13.6% in April

8:30 am: Citi: Stock market rally has been driven by short covering

The S&P 500 has surged more than 30% since hitting an intraday low on March 23. However, strategists at Citi think those gains are a byproduct of investors covering short positions. The strategists point out that equity prices have been soaring despite $120 billion in redemptions from stock funds. “From here, a move higher will need new longs and inflows,” they said in a note. —Imbert, Bloom

8:09 am: Powell slated for a talk with former Fed vice chair Alan Blinder

Federal Reserve Chairman Jerome Powell is scheduled to speak Friday to The Griswold Center for Economic Policy Studies at Princeton University. The event, taking place virtually at 11 a.m. ET, will be moderated by Alan Blinder, former Fed vice chairman under Bill Clinton. The focus of the talk will likely be on the economy and the central bank’s stimulus measures during the coronavirus crisis. Powell will also take part in a moderated audience question and answer session. Earlier this month, Powell said policymakers may have to use additional tools to pull the country out of an economic downturn that has caused “a level of pain that is hard to capture in words.” —Li

8:02 am: Raymond James becomes the biggest bull on Lululemon

Shares of the athletic retailer ticked up in premarket trading on Friday after Raymond James hiked its price target to the highest on Wall Street. Raymond James, which has a buy rating on Lululemon, raised its 12-month target to $335 per share from $250 per share. The new target implies a near 18% rally from Thursday’s closing price of $284.42 per share. The firm said the yoga-pants maker remains of its top ideas for long-term, secular winners in a retail landscape that is characterized by a widening gap between winners and losers. “We believe LULU’s dominance in the growing athletic apparel market will continue to increase as its innovation machine continues to deliver exciting and unique product to its loyal customer base,” Raymond James retail analyst Matthew McClintock said in a note to clients. Raymond James increased its fiscal first quarter earnings estimates for 2020, but the numbers still represent large declines from 2019. “The central takeaway here is that near-term earnings declines are transitory and that, more importantly, the current crisis only accelerates LULU’s favorable positioning as a leader in the athletic apparel market,” McClintock added. Shares of Lululemon rose 0.6% in early trading. – Fitzgerald

8 am: Oil on track for best month on record after gaining more than 70%

Oil moved lower on Friday, but for the month West Texas Intermediate, the U.S. benchmark, is on track to register a more than 70% gain for its best month on record. After falling to record lows in April, an uptick in demand as well as historic supply cuts have driven prices higher. But prices are still far from recent highs. On Friday, WTI traded around $33 per barrel, or about 50% below its January high of $65.65 per barrel. “It certainly doesn’t feel like it was oil’s best month ever,” said Regina Mayor, KPMG’s global head of energy. “Low $30s for WTI is clearly better than where we were at the end of April, but it’s not sufficient enough to bring the bulk of production back online,” she added. —Stevens

7:23 am: Stock futures fall as Trump news conference looms

Stock futures fell slightly on Friday morning as traders awaited a news conference from President Donald Trump regarding China. Dow Jones Industrial Average futures dipped 70 points, or 0.3%. S&P 500 and Nasdaq 100 futures both fell 0.1%. Trump announced he would hold the news conference late during Thursday’s session, sending equity prices lower for the day. The news conference comes after China approved a controversial national security bill earlier this week.Despite the decline in futures, Wall Street was headed for solid weekly gains. The Dow and S&P 500 are both up 3.8% and 2.5%, respectively, for the week while the Nasdaq Composite has gained 0.5%. —Imbert

— With reporting from Yun Li, Thomas Franck, Michael Bloom, Patti Domm, Kevin Stankiewicz and Steve Liesman.

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