Stocks climb after President Trump speaks on China at news conference

Stocks staged a late-day rebound Friday, climbing after President Donald Trump gave a long-awaited news conference on China without laying out any new tariffs or sanctions against the country.

Investors had spent most of Friday bracing for Trump to unveil new measures aimed at punishing China, after Beijing moved to strengthen its authority over Hong Kong, a semi-autonomous Chinese city that enjoys special trade and financial relations with the United States.


Trump said that he would ask his administration to revoke special privileges afforded to Hong Kong, including on trade and law enforcement, and that it would sanction certain Chinese officials. Both those measures have been discussed by other administration officials and lawmakers in recent days.

“My announcement today will affect the full range of agreements we have with Hong Kong,” he said, including “action to revoke Hong Kong’s preferential treatment as a separate customs and travel territory from the rest of China.”


The S&P 500 posted a small gain for the day, the last trading session in May, leaving the benchmark stock index up more than 4.5% for the month. Technology companies, which are particularly sensitive to tension with China because the country serves as an important manufacturing hub and market, rallied.

Combined with a remarkable 12.7% gain in April, it was the best two-month jump for the markets in 11 years, a rise that reflects investors’ focus on the return of economic activity in regions that were locked down in an attempt to fight the coronavirus, as well as trillions of dollars’ worth of monetary and fiscal stimulus that has surged into financial markets and consumer bank accounts in recent weeks.

“The market has sort of intuitively decided that the worst of the COVID risk is behind us,” said Steve Sosnick, chief strategist at Interactive Brokers in Greenwich, Connecticut.

That may prove incorrect. There’s no guarantee that current efforts to reopen will go smoothly. Experts say infections could begin to rise again as people begin to return to their normal activities. A second wave of infections in the fall remains a possibility.

Dollar stores see sales surge during the pandemic.

The country’s largest dollar-store chains reported their latest quarterly results Thursday, blowing away expectations for sales and profits. These discounters generally thrive during periods of high unemployment and weak economic growth, and the coronavirus crisis is no exception.

“We do very good in good times, and we do fabulous in bad times,” said Todd Vasos, chief executive of Dollar General. His company reported a 28% rise in sales in its latest quarter.

Dollar Tree reported an 8% rise in revenue over the same period. “In 2008, folks lost jobs, too, and they needed us, and they found us,” said Gary Philbin, the chain’s chief executive.

For the year, both companies’ stock prices are up nearly 20%, easily outperforming the S&P 500 and nearly doubling the rises recorded by Walmart and Target.

Dollar General said it had hired more than 50,000 people since mid-March, and Dollar Tree hired more than 25,000 over a similar stretch. Both are paying special bonuses for workers during the pandemic; Dollar General said these totaled $60 million in its latest quarter. Still, working conditions at these stores have faced criticism, before and during the coronavirus outbreak.

Can the dollar keep its gains?

The U.S. dollar has gained about 7% this year against a basket of major currencies. But with interest rates at rock-bottom levels, the Fed’s printing presses revving up, and the government borrowing enormous sums for stimulus spending, can it retain its haven status?


A recent research note by Daco found that since 1973, the dollar has appreciated an average of 6% in the past six recessions, in line with its performance during the current downturn. Daco expects the dollar to remain strong this year, but not for the usual reasons.

Unlike in past recessions, when investors flocked to the safety of Treasury bonds, foreign investors dumped U.S. government debt at a record rate in March, which would normally push the dollar down. But since the Fed flooded the markets with stimulus, the U.S. stock market has, unusually, become a “safe refuge,” Daco wrote, propelled by tech stocks whose businesses are benefiting from stay-at-home orders.

Catch up: Here’s what else is happening.

— Ascena Retail Group — the owner of Ann Taylor, Loft and Lane Bryant — said Thursday that “the uncertainty created by COVID-19 requires us to evaluate all options available to protect the business and its stakeholders,” sending its shares down Friday. The company, which also owns Justice, said that its revenue plummeted 45% in the quarter that ended May 2 and it had reopened only 450 of its 2,800 stores as of May 27.

— Nordstrom, the top-performing department store in the United States, said Thursday that its net sales fell 40% to $2 billion in the first quarter and that it posted a net loss of $521 million. Digital sales accounted for more than half its total net sales during the quarter. The retailer closed stores March 17 and started reopening in early May. It said it now has about 40% of its locations open.

— Costco Wholesale said Thursday that its net sales rose 7.3% to $36.5 billion in its quarter ending May 10 and that it posted a net profit of $838 million, as the pandemic prompted customers to stock up on goods. The warehouse chain, which has more than 500 U.S. locations, said its income took a hit from a $283 million pretax charge “from incremental wage and sanitation costs related to COVID-19.”

c.2020 The New York Times Company

Recommended on Baltimore Sun