U.S. stocks ended the session on May 28 mostly in the negative territory, as equities took a dive in the final trading hour after President Donald Trump said he would hold a news conference on China on May 29. In addition, Facebook and Twitter weighed on the market after Trump said he would sign an executive order concerning social media companies. Stocks were higher during most of the session on Thursday as investors were focused on fast economic recovery from the pandemic.
The Dow Jones Industrial Average closed at 25,400.64 after losing 0.6%, the broader S&P 500 reached 3,029.73 after declining 0.2% and the tech-laden Nasdaq Composite hit 9,368.99 after inching 0.5% lower.
The fear-gauge CBOE Volatility Index (VIX) rose 1.5% to close at 29.03 on May 28. Finally, advancing issues outnumbered declining ones on the NYSE by a 1.38-to-1 ratio.
Tensions Rise between Washington and Beijing
President Donald Trump on Thursday said he would hold a news conference “on China” on Friday, but he offered no further details on the matter. The announcement came after a week of rising tensions between the United States and China over Hong Kong. In addition, China’s handling of the coronavirus hasn’t gone down well with Trump, which he made clear earlier.
After Trump publicly expressed his unhappiness over Beijing’s approach to coronavirus before it turned into a pandemic, China suggested that the virus originated in U.S. service members, a claim extensively rejected by global health experts.
In addition, China’s steps toward curbing the long-standing independence of Hong Kong since the past week has drawn flack from the United States. China’s legislature approved a controversial national security law on May 28, which threatens the semi-autonomous territory’s basic political freedoms and civil liberties. China’s National People's Congress unanimously approved the resolution. 2,878 voted for and six abstained while only one delegate voted against the proposal.
Trump’s Crackdown on Censorship by Social Media Giants
Trump signed an executive order late on May 28 that takes on “censorship” by social media sites, after Twitter, Inc. TWTR applied warning labels to two of the President’s tweets on May 26 that had made misleading claims about mail-in voting. The President tweeted on May 27, “Twitter is completely stifling FREE SPEECH, and I, as President, will not allow it to happen!”
The executive order targets companies granted liability protection through Section 230 of the Communications Decency Act. Under the act, social media giants cannot be sued for much of the content posted by others via their sites. However, the act still requires congressional action. Trump said on Thursday that he would definitely pursue legislation in addition to the executive order.
According to Attorney General William Barr, the statute “has been stretched way beyond its original intention” and that the Justice Department would seek to sue social media companies.
On May 28, shares of Twitter and Facebook, Inc. FB were down 4.5% and 1.6% respectively. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stocks That Made Headlines
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