Stock Futures Sluggish as U.S.-China Drama Ramps Up

China passed new security measures against Hong Kong last night

Jake Scott
May 22, 2020 at 9:27 AM
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Dow Jones Industrial Average (DJI) futures are hovering just above fair market value this morning, as Wall Street looks to wrap up a winning week and head into Memorial Day weekend on a high note. Gains are capped as tensions between the U.S. and China increased overnight, after China released a draft legislation regarding new security measures that would increase Beijing's hold over Hong Kong. This comes a day after the U.S. Senate passed a bill that would potentially take Chinese stocks off U.S. exchanges.

Futures on the S&P 500 Index (SPX) and Nasdaq-100 Index (NDX) are beginning the day below fair market value, but there are still high hopes for a COVID-19 vaccine, especially after National Institute of Allergy and Infectious Diseases Director Dr. Anthony Fauci called Moderna's (MRNA) potential coronavirus vaccine "promising."

Continue reading for more on today's market, including: 

  • The cruise stock defying sector struggles.
  • Analysts dug into Expedia stock after earnings.
  • Plus, Alibaba eyes U.S. bill; Lululemon begins reopening stores; and NVDA showered with bull notes. 

Stock Futures Chart May 22

5 Things You Need to Know Today

  1. The Cboe Options Exchange (CBOE) saw 1.3 million call contracts traded on Thursday and 725,600 put contracts. The single-session equity put/call ratio rose to 0.55, and the 21-day moving average remained at 0.59.
  2. Alibaba Group Holding Ltd - ADR (NYSE:BABA) is down 2.6% before the open, even after the e-commerce behemoth beat fiscal fourth-quarter top and bottom lines. Sporting a 12-month lead of 33.6% and holding on to its year-to-date breakeven, Alibaba awaits the U.S. bill that would delist Chinese companies.
  3. Up 0.5% ahead of the bell, retailer Lululemon Athletica Inc (NASDAQ:LULU) announced it reopened more than 150 of its locations and plans on reopening around 200 additional stores over the next two weeks. LULU is up 15% in 2020 and hit a record high of $268.26 yesterday.
  4. The shares of NVIDIA Corporation (NASDAQ:NVDA) are up 0.2% in electronic trading, after the chipmaker's first-quarter earnings and revenue beat Wall Street's . estimates. Year-over-year, NVDA is up a staggering 130.6%, and has received 17 price-target hikes this morning, the highest coming from Wells Fargo to $430.
  5. There's no notable economic to close out the slow week. AMC Entertainment (AMC), Campbell Soup Company (CPB), Deere (DE), Foot Locker (FL), and Pinduoduo (PDD) will report earnings.

Buzz chart May 22

China's National Security Law Throws Overseas Markets Off

Stocks in Asia fell today, as U.S.-China tensions rise once again, in addition to spiked tensions between Hong Kong and Beijing. Hong Kong’s Hang Seng dropped a staggering 5.6%, amid news that China is ready to impose a new national security law on the city after months of anti-government protests in the area. This left China’s Shanghai Composite at a 1.9% drop, alongside an announcement that China will not set a gross domestic product (GDP) target for 2020. Meanwhile, the Kospi in South Korea shed 1.4%, while Japan’s Nikkei lost 0.8%. 

In Europe, stocks are mostly struggling for direction today, as investors eye the growing rift between the U.S. and China. London’s FTSE 100 is down 0.4% so far, after U.K. borrowing reached a record high of £62.1 billion ($75.8 billion) in April, while retails sells dropped by an unprecedented 18%. The German DAX has dipped 0.1%, while today’s only winner so far, the French CAC 40, is currently up 0.2%.


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