Stock futures were mixed in early trading, with the Nasdaq lagging, but by midday all of the major averages had moved solidly into the green and the Nasdaq has become the leader. A fall in continuing jobless claims provided support for stocks, with today's report revealing the first weekly decline in the measure since the pandemic hit the economy. However, this was offset by the cross-current of increased tensions between the U.S. and China. After China's National People's Congress approved a national security bill for Hong Kong, President Trump teased that he plans to hold a press conference tomorrow regarding China, and apparently its new Hong Kong law. Late in the day, all three indices fell sharply and finished the session in the red.
ECONOMIC EVENTS: In U.S. data, a revision in the first quarter GDP contraction rate to 5.0% from 4.8% left a slightly weaker than expected headline thanks to a huge $50.8B revision to inventories. Durable goods orders dropped another 17.2% in April. Weekly jobless claims contracted 323,000 to 2.12M in the week ended May 23, moving the four-week moving average down to 2.61M. An index of pending home sales declined 21.8% to 69.0 in April.
TOP NEWS: Social media companies were in focus after Reuters reported that President Donald Trump will sign an executive order regarding the industry after the president threatened to shut down websites he accused of stifling conservative voices. The heads of the two most prominent social media companies, Twitter (TWTR) and Facebook (FB), appear on different sides of the issue, as Facebook CEO Mark Zuckerberg told Fox News' Dana Perino that privately-owned digital platforms should not act as the "arbiter of truth," while Twitter CEO Jack Dorsey defended his platform's decision to fact check and place warnings on two of Trump's tweets this week.
HP Inc. (HPQ) shares fell 12.3% after the company reported results for the second quarter, with earnings per share beating analysts' estimates and revenue coming in below expectations. The company also provided conservative third quarter guidance and noted that it had some supply chain issues in Q2.
Shares of Boeing (BA) rose fractionally after the company said last night that it has resumed production of 737 MAX aircraft at its Renton, Washington factory. "We've been on a continuous journey to evolve our production system and make it even stronger," said Walt Odisho, vice president and general manager of the 737 program. "These initiatives are the next step in creating the optimal build environment for the 737 MAX."
Meanwhile, Hertz (HTZ) shares dropped 22.1% after activist investor Carl Icahn disclosed in a regulatory filing last night that he has exited his stake in the rental car company.
Additionally, Bloomberg reported that Cisco (CSCO) is in advanced talks to acquire ThousandEyes for close to $1B.
MAJOR MOVERS: Among the noteworthy gainers was Diversified Healthcare Trust (DHC), which rose 22.4% after being named to join the S&P 600. Also higher were Triumph (TGI) and Dollar Tree (DLTR), which gained a respective 11.4% and 11.6% after reporting quarterly results.
Among the notable losers was Luckin Coffee (LK), which dropped 20.5% in New York after a Wall Street Journal investigation found a network of fake buyers and a made-up employee help drive the company's growth. Also lower was Plantronics (PLT), which fell 14.7% after reporting quarterly results.
INDEXES: The Dow fell 147.63, or 0.58%, to 25,400.64, the Nasdaq lost 43.37, or 0.46%, to 9,368.99, and the S&P 500 declined 6.40, or 0.21%, to 3,029.73.
