US open: Stocks give back gains amid renewed worries about Sino-US relations
US stocks were weaker in early trade on Thursday, giving back some of the stellar gains made in the previous session amid renewed jitters about Sino-US relations.
At 1450 GMT, the Dow Jones Industrial Average was down 1.6% at 22,505.07, the S&P 500 was off 0.6% at 2,427.54 and the Nasdaq was 1.7% lower at 6,443.62.
On Wednesday, the Dow surged more than 1,000 points, racking up its biggest one-day points gain ever. This followed Wall Street’s worst-ever performance on Christmas Eve.
Stocks in the US had rallied on the back of Mastercard data showing that sales during the holiday season rose the most in six years in 2018 and after Kevin Hassett, chairman of the White House Council of Economic Advisers, affirmed that Fed chairman Jerome Powell’s job was ‘100% safe’.
Adding to the upbeat tone were reports that a US government delegation will travel to Beijing in the week of 7 January to hold trade talks with Chinese officials.
The positive mood was short-lived, however, with traders likely stepping in to book some profits.
Russ Mould, investment director at AJ Bell, noted the 5% surge the S&P 500 index on Wednesday.
"Encouragingly, three of the seventeen other 5%-plus daily advances came immediately in the aftermath of the 1987 crash, when buying did prove a good plan, and two more in March 2009 when the S&P finally hit bottom as the Great Financial Crisis began to abate.
"But history also shows eight of the 5%-plus gains came during the bear market of 2007-2009 and three more during the market downturn of 2000-2003, to suggest there is still a risk that this year’s Boxing Day bonanza could be no more than a wicked bear trap set to lure investors into more trouble."
Relations between the US and China were in focus again following a Reuters report that President Donald Trump is considering an executive order to ban US companies from using equipment built by China’s Huawei and ZTE.
On the macro font, figures released by the Labor Department earlier showed the number of Americans filing for unemployment dipped a touch last week.
US initial jobless claims fell by 1,000 from the previous week’s revised level to 216,000. The previous week's level was revised up by 3,000 to 217,000. Economists had pencilled in a level of 217,000. Meanwhile, the four-week moving average declined by 4,750 to 218,000. The previous week's average was revised up by 750 to 222,750.
The four-week average is considered more reliable as it smooths out sharp fluctuations in the more volatile weekly figures, giving a more accurate picture of the health of the labour market.