The Dow Jones struggled as the Trump administration criticized China's handling of coronavirus, threatening to inflame U.S.-China tensions.
The Dow Jones sputtered toward a dismal showing on Thursday after China’s decision to adopt more accurate reporting statistics triggered a sudden spike in the number of confirmed coronavirus cases.
While stock market losses remain limited, simultaneous moves in haven assets like gold and the Japanese yen paint a confusing outlook for the Dow.
That’s especially true after Trump official Larry Kudlow broke from precedent and barked that the U.S. was “disappointed” with China’s response to the epidemic.
All three of the major U.S. stock market indices slid into decline ahead of the closing bell.
The S&P 500 and Nasdaq both declined 0.13%, while the Dow Jones Industrial Average suffered a more painful blow.
At least check, the Dow had declined by 106.79 points or 0.36% to 29,444.63.
Commodity prices were generally higher on Thursday. The oil price extended its relief rally another 0.84% to $51.60.
The price of gold jumped 0.45% to $1,578.70, and silver bounced 0.7% to $17.62.
Confirming the tough day for risk assets, the safe-haven Japanese yen advanced against the U.S. dollar, despite another slide in EUR/USD after U.S. CPI data beat expectations.
A change in coronavirus reporting methodology rocked Dow futures overnight. China’s Hubei province was forced to raise its number of confirmed coronavirus infections by a whopping 15,000.
The chaos was palpable as Beijing made the call to remove the leading officials in charge of keeping things under control.
Further evidence that things are heading in the wrong direction came Thursday morning. Trump’s top economic advisor, Larry Kudlow, commented that the U.S. was “quite disappointed” with how China is handling the outbreak.
This contrasts sharply with President Trump’s own commentary. He has stated on numerous occasions that he was pleased with how Xi Jinping has handled the crisis.
Despite Trump’s stance, Kudlow bemoaned Beijing’s reluctance to allow the CDC to send a team of experts to help. This has fueled speculation that the coronavirus outbreak could be considerably worse than official statistics suggest.
Despite the inevitable shock to the economy, the resilience of the Dow Jones – and Wall Street in general – has been notable.
In a comment to CCN.com, Nordea Asset Management’s Sebastian Galy provided a glass-half-full take on the sharp spike in reported cases:
The Central government sent a troubleshooter to Hubei province, leading to [personnell] changes and roughly 15,000 new cases.
Many had indeed pointed out that the health data had strange properties. This able move while leading to some pressure on ebullient equity markets is a positive one.
We have been cautious since January on equity markets and while we expect profit warnings to come rolling in and economic data to roll-off on the back of the China shock, we are now a bit more constructive.
It was a risk-off day in the Dow 30, and its two most heavily weighted stocks – Boeing and Apple – dragged the index lower with losses of around 0.6%.
Cisco was the worst performer in the Dow Jones, dropping over 4.6% after investors reacted poorly to its latest earnings release.
Caterpillar stock was a surprise winner. Its 0.4% rally appears to defy its own rather bleak predictions for its business. The recovery came after Goldman Sachs upgraded CAT shares to a buy.
Microsoft stock ticked slightly lower after a judge ordered a hold on its Pentagon cloud contract amid a dispute with Amazon.
The index’s worst-performing stock this year – or “dog of the Dow” – is Exxon Mobil (-12%). The energy stock resumed its slide today despite the rally in oil prices.
This article was edited by Josiah Wilmoth.