By Geoffrey Smith
Investing.com -- U.S. stock markets opened Friday mostly lower but on course to notch their highest weekly close in over two months as hopes for a speedy summer rebound in the economy were tempered by sobering news out of China overnight.
By 9:40 AM ET (1340 GMT), the Dow Jones Industrial Average was down 118 points, or 0.5%, at 24,356 points, while the S&P 500 and the Nasdaq Composite were both down 0.4%.
Overnight, the National People's Congress - the annual gathering of the country's legislative assembly - produced two pieces of news with bearish implications for stocks: a regular government update that removed the country's annual growth target for the first time in three decades, which seeded worries about the ability of the world's second-largest economy to rebound from the coronavirus pandemic; and a draft law proposal that would impose tighter central control over Hong Kong, in defiance of the "one country, two systems" agreement that China promised to respect when it regained control of the former British colony.
Any Chinese move to undermine Hong Kong's autonomy will result in "very serious" U.S. retaliation, President Donald Trump warned late on Thursday.
Chinese ADRs in New York were among the most active losers in early trade, with e-commerce giant Alibaba (NYSE:BABA) falling 4.1% to its lowest in a week, despite posting revenue and earnings that were well ahead of expectations for the three months through April, despite a heavy loss on the company's investments.
JD.com (NASDAQ:JD), which competes with Alibaba in online shopping, was down 3.1%, while search engine Baidu (NASDAQ:BIDU) ADRs were down 5.5% and NetEase (NASDAQ:NTES) stock was down 6.9%.
Domestic stocks fared slightly better, even those with direct or indirect exposure. Deere & Company (NYSE:DE), demand for whose machinery is conditioned to a big degree by Chinese export opportunities, rose 0.5% after posting quarterly results that were not as bad as feared, thanks largely to good cost control.
However, Hewlett Packard Enterprise (NYSE:HPE) stock fell 10.1% and International Business Machines (NYSE:IBM) stock fell 1.3% after both companies flagged major job cuts, anticipating structurally lower demand in the post-Covid-19 world.