(AP) — The S&P 500 eked out a tiny gain after being weighed down for much of the day by slides in major technology stocks. That tech sector, which has far outperformed the rest of the market this year, had a rare drop Friday after President Donald Trump unveiled his latest escalation against China’s tech industry. The S&P 500 rose less than 0.1%. Investors were also disappointed at a lack of progress by lawmakers on delivering more aid for the U.S. economy. On the other hand, employers hired more workers last month than economists were expecting. Treasury yields rose and gold fell.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story appears below.
A slide for technology stocks on Friday is helping to halt Wall Street’s big rally from earlier this week, after President Donald Trump unveiled his latest escalation against China’s tech industry.
The rare stumble for tech stocks coincided with worries about whether Washington can deliver more aid for the U.S. economy, as an informal Friday deadline looms to reach the outlines of a deal that investors say is crucial. Together, they helped overshadow a better-than-expected report on the U.S. jobs market, one that helped most stocks on Wall Street to rally, just not enough to carry broad market indexes.
The S&P 500 was 0.4% lower in afternoon trading, on pace to break a five-day winning streak that had brought the index back within 1.1% of its record high. It spent much of the day wavering between a small gain and losses.
The Dow Jones Industrial Average was down 83 points, or 0.3%, at 27,303, as of 2:40 p.m. Eastern time. Tech stocks fell more sharply amid worries that China could retaliate against U.S. chip makers and others following the latest escalation of U.S.-China tensions and pulled the Nasdaq composite down 1.5% from its record. It’s on pace for its worst loss in two weeks.
The day’s headline economic report was an encouraging one for investors: The U.S. job market strengthened by more last month than economists had forecast, with employers adding 185,000 more jobs than the nearly 1.6 million that investors expected to see. Analysts said they found some encouraging trends throughout the report, such as a stronger-than-expected rise in average hourly earnings.
Several areas of the market that tend to rise when investor upgrade their expectations for the economy were doing better. Stocks of smaller companies were rallying, with the Russell 2000 up 0.7%.Treasury yields also climbed. Stocks of banks, which have swung sharply with prospects for the economy and interest rates, were also among the market’s strongest.
“Yes, future employment data will likely slow due to more COVID-19 restrictions, but for now you have to be quite impressed with how far we’ve come the last few months,” Ryan Detrick, chief investment strategist for LPL Financial, said in a statement.
Still, the job report also showed that hiring weakened in July after two months of acceleration, and the job market remains far below where it was before the pandemic.
“What is concerning is that the rate of improvement, without a significant vaccine breakthrough, will continue to be more modest and deliberate from here,” Rick Rieder, BlackRock’s chief investment officer of global fixed income, said in a statement.
It’s a very busy day for markets, with investors also focused on Capitol Hill, where Congress and White House officials have been negotiating on a hoped-for deal on more aid for the economy. A marathon meeting Thursday left both sides still far apart on key issues, and talks are ongoing.
Besides the informal Friday deadline that officials had put on the talks, investors say Washington needs to act quickly because $600 in weekly unemployment benefits from the federal government just expired. The economy has shown signs of improvements since the spring but is still hobbling, and concerns are rising that it could backtrack amid a resurgence in coronavirus counts.
Trump is considering executive orders to address some of the issues if Congress doesn’t reach a deal, such as evictions and unemployment insurance, but critics question how much impact they would have.
Much of the market’s focus was also on moves Trump did make Thursday night: He ordered a sweeping but vague ban on dealings with the Chinese owners of popular social media apps TikTok and WeChat on security grounds.
China’s government criticized the move as “political manipulation.”
Tensions between the world’s two largest economies have been escalating for years, highlighted by the U.S.-China trade war that seemed to have reached at least a temporary truce early this year. But tough talk has continued to flow, with Trump keying in on TikTok in particular recently.
On Friday, the U.S. imposed sanctions on Hong Kong officials, including the pro-China leader of the government, accusing them of roles in squashing freedom in the former British colony.
The escalating U.S.-China tensions helped send tech stocks in the S&P 500 down 2%, more than double the loss of any of the other 10 sectors that make up the index.
Even Apple, whose stock has been nearly unstoppable through the pandemic, slumped. It fell 2.4%, on pace for its first drop in eight days.
On the winning end of the market was T-Mobile US, which jumped 6.5% for one of the biggest gains in the S&P 500. It gave a financial forecast for the second half of the year that topped Wall Street’s expectations.
The yield on the 10-year Treasury erased an earlier dip to rise to 0.56% from 0.53% late Thursday.
Gold slipped, a rare step back following its record-setting run as investors seek safety amid a weak global economy, trade tensions and low interest rates. An ounce of gold to be delivered in December lost $41.40 to settle at $2,028.00.
Benchmark U.S. crude fell 73 cents to settle at $41.22 per barrel. Brent crude, the international standard, lost 69 cents to $44.40 a barrel.
In China, stocks in Shanghai lost 1%. The Hang Seng in Hong Kong dropped 1.6%, while Japan’s Nikkei 225 slipped 0.4% and South Korea’s Kospi added 0.4%.
In Europe, Germany’s DAX returned 0.7%, and France’s CAC 40 rose 0.1%. The FTSE 100 in London added 0.1%.