S&P dips as China advances idea of "national security" bill for Hong Kong
The S&P and Dow are a bit lower at midday, while the Nasdaq has come back to the flat line, after stocks in Hong Kong plunged following news that China is pushing through a controversial national security law in the territory. President Trump has said he would "react strongly" if Beijing proceeds with this plan, which will threaten democracy in the Special Administrative Region and break the 50-year "one country, two systems" agreement. In earnings news, both Alibaba (BABA) and Deere (DE) beat consensus projections.
ECONOMIC EVENTS: No U.S. data of note was reported ahead of the long holiday weekend.
Outside of the U.S., Hong Kong's Hang Seng plunged about 5.5% as China, at its annual National People's Congress, confirmed that there will be a bill establishing "an enforcement mechanism for ensuring national security" for Hong Kong.
TOP NEWS: Shares of Nvidia (NVDA) are 3% higher near noon after the company exceeded expectations for Q1 as better datacenter demand helped fuel revenue and gross margin upside. Rosenblatt analyst Hans Mosesmann, who was among the Wall Street pundits who raised his price target on Nvidia following the report, tells investors that Nvidia "already dominates virtually all aspects of GPU acceleration" and can work next on innovating on the data processing side.
Goldman Sachs analyst Piyush Mubayi noted that Alibaba reported better than expected Q4 results with revenues that beat both the firm's and Bloomberg's consensus. Of note, gross merchandise volume transacted in the Alibaba Digital Economy hit $1T for the first time in fiscal 2020. However, amid the headlines regarding the rising tensions between the U.S. and China, Alibaba shares trading in New York are down 5% near noon.
Meanwhile, Deere shares are up 1% after the company's Q2 sales and earnings beat. Deere's decision to reinstitute guidance suggests stabilizing end market demand, Goldman Sachs analyst Jerry Revich tells investors.
Shares of HP Enterprise (HPE) are not faring as well following earnings, sliding 11%. Raymond James analyst Simon Leopold downgraded HP Enterprise to Market Perform from Outperform following its Q2 results, stating that its unexpected restructuring efforts degrade his confidence. Meanwhile, Morgan Stanley analyst Katy Huberty said HP Enterprise's $1B cost-reduction plan, salary cuts and lack of visibility into backlog conversion and future order trends suggest the company is not yet at a bottom and the trough "is still on the come."
Arvind Krishna, the new CEO of IBM, is tasked with cutting an "unspecified number" of jobs as the company moves to "revive growth," wrote Asa Fitch of The Wall Street Journal. A person familiar with the company's plans said they are thought to affect "several thousand" of IBM's roughly 350,000 employees, added the WSJ story.
MAJOR MOVERS: Among the noteworthy gainers was Splunk (SPLK), which rose 12.5% after it reported quarterly results and provided Q2 revenue guidance.
Also higher after reporting quarterly results were LiveRamp (RAMP) and e.l.f. Beauty (ELF), which gained a respective 27% and 15%.
Among the notable losers was Amarin (AMRN), which fell 2% after Hikma (HKMPF) was given FDA approval for a generic version of Amarin's Vascepa.
Also lower was Intercept (ICPT), which fell 14% after the FDA requested additional data on its liver fibrosis drug.
INDEXES: Near midday, the Dow was down 132.37 or 0.54%, to 24,341.75, the Nasdaq was flat at 9,284.58, and the S&P 500 was down 7.16, or 0.24%, to 2,941.35.