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9:58 a.m. The Dow Jones Industrial Average is slipping Wednesday morning as Hong Kong has suddenly become a much bigger sticking point between the U.S. and China.
The Dow has dropped 65.27 points, or 0.2%, to 27,868.75, while the S&P 500 has declined 0.2% to 3115.64, and the Nasdaq Composite is off 0.1%.
The dust-up began after the U.S. Senate passed a bill that would require annual certification of its independence from China by the U.S. Secretary of State in order to maintain its special status. China responded by warning the U.S. to stay out of its business. With so much of the market’s hopes resting on the possibility of a trade deal, this wrinkle has led to a risk-off tone to start the day.
So why isn’t the market down more? Credit earnings from Target (TGT) and Lowe’s (LOW), which seem to have put some of yesterday’s retail worries to bed. “The Senate’s passing of the ‘Hong Kong’ bill means that it will eventually be in front of the President to sign, which makes the timeline of the China trade deal being done before December 15 a real challenge,” writes NatAlliance Securities’ Andrew Brenner. “Equity markets are lower, but they still believe a deal is coming...The weak retail sales numbers from Kohl’s (KSS) and Home Depot (HD) have been offset by the better than expected numbers from Target and Lowe’s.”
Lowe’s stock is up 4.8% to $118.80, while Target has gained 11% to $122.71.
Write to Ben Levisohn at Ben.Levisohn@barrons.com