S&P 500 holds steady at near 3-month high

(Reuters) – U.S. stocks were largely flat on Thursday, with the S&P 500 holding at near three-month highs as investors paused after a three-day rally, weighing hopes of a swift economic recovery against underlying tensions between United States and China.

Boeing Co climbed 3%, the most among the 30 blue-chip Dow components, as the planemaker said it had resumed production of its 737 MAX passenger jet at its Washington plant, although at a “low rate”.

Its top supplier, Spirit AeroSystems, edged up 0.9%.

The benchmark S&P 500 managed to close above the key 3,000 mark on Wednesday as growing evidence of a pickup in business activity and massive amounts of stimulus drove hopes of an economic recovery.

But analysts have warned that worsening ties between Washington and Beijing over the handling of the coronavirus outbreak and a new national security law in Hong Kong pose a major threat to the stock market’s strong recovery from the crash earlier this year.

“I would prefer that the market not go up quite as fast because the sharper it moves higher, the more vulnerable it becomes to a pullback,” said Randy Frederick, vice president of trading and derivatives for Charles Schwab in Austin, Texas.

The Trump administration is crafting a range of options, including targeted sanctions, new tariffs and further restrictions on Chinese companies, according to U.S. officials and people familiar with the discussions.

President Donald Trump has promised action over Hong Kong by the end of the week.

“What is happening with Hong Kong feels like the first frost in a new Cold War,” said Jasper Lawler, head of research at London Capital Group.

Chipmakers, most of which have a large exposure to China, were down 0.5%.

Meanwhile, the number of Americans filing for unemployment benefits held above 2 million for a 10th straight week, while a separate report showed GDP contracted at a bigger-than-expected 5% annualized rate in the first quarter, the deepest drop in output since the 2007-09 Great Recession.

Six of the 11 major S&P sectors were higher, with healthcare leading gains.

At 9:50 a.m. ET, the Dow Jones Industrial Average was up 11.87 points, or 0.05%, at 25,560.14, the S&P 500 was up 1.70 points, or 0.06%, at 3,037.83, and the Nasdaq Composite was up 2.77 points, or 0.03%, at 9,415.13.

Memory chipmaker Micron Technology Inc dropped 4% despite raising its revenue forecast for the third quarter.

Twitter and Facebook slipped 1.9% and 0.9%, respectively, ahead of an expected order from Trump that would review a law that has long protected the companies from being responsible for the material posted by their users.

Declining issues nearly matched advancers on the NYSE and the Nasdaq.

The S&P index recorded 12 new 52-week highs and no new low, while the Nasdaq recorded 36 new highs and five new lows.

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