(Reuters) – Wall Street was set to pull back on Tuesday as President Donald Trump’s moves to force China-owned TikTok into a sale of its U.S. operations drew a sharp rebuke from Beijing, ratcheting up tensions as the world slides into a pandemic-fuelled recession.
Friction between the world’s top two economies took a back seat in the first half of 2020 as the COVID-19 pandemic crushed global growth, and an escalation now would hamper the recovery of some exporters and importers and fan fears of a deeper economic slump.
With Microsoft Corp (MSFT.O) looking to buy short-video app TikTok’s U.S. operations, Trump said on Monday the U.S. government should get a “substantial portion” of any deal price. On Tuesday, state-backed newspaper China Daily said the country will not accept the “theft” of the technology company.
Microsoft’s shares were down 1.6% in premarket trading after surging more than 5% on Monday as the company confirmed it was pursuing a deal with TikTok.
“It will be interesting to see if Microsoft will be able to buy TikTok,” said Stephen Lee, portfolio manager at Logan Capital Management in Newtown Square, Pennsylvania.
“(But) in the short term, we are more concerned with how soon the consumer is adapting and getting back to engaging with the economy.”
The S&P 500 closed Monday within 3% of its all-time high, powered over the past four months by a stimulus-led rebound and a rally in tech-related stocks including Apple Inc (AAPL.O), Netflix Inc (NFLX.O) and Amazon.com Inc (AMZN.O).
At 8:29 a.m. ET, Dow e-minis 1YMcv1 were down 66 points, or 0.25%, S&P 500 e-minis EScv1 were down 13 points, or 0.4% and Nasdaq 100 e-minis NQcv1 were down 40 points, or 0.36%.
Investors are now awaiting signs of progress in a fifth major coronavirus-aid bill with Congress set to resume talks on Tuesday to narrow gaping differences.
In earnings-driven moves, Insurer American International Group Inc (AIG.N) fell 2.2% after posting a 56% slump in quarterly adjusted profit, while Spirit AeroSystems (SPR.N) dropped 4.6% on posting a bigger-than-expected quarterly loss.
Ralph Lauren Corp (RL.N) slid 5.6% after it missed estimates for quarterly revenue.
Take-Two Interactive Software Inc (TTWO.O) rose 4.6% as it raised its annual adjusted sales forecast on demand for its videogame franchises “Grand Theft Auto” and “NBA 2K”.
Rival Activision Blizzard Inc (ATVI.O) gained 3.4% ahead of its results due after the closing bell.
About 83% of the 322 companies in the S&P 500 that have reported quarterly results so far have beaten estimates for earnings, according to IBES Refinitiv data.
Walt Disney Co (DIS.N), Fox Corp (FOXA.O) and Wynn Resorts Ltd (WYNN.O) are also expected to report quarterly results later in the day.
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