(Reuters) – U.S. stocks edged higher on Monday on prospects of a post-pandemic economic recovery, but the sentiment remained fragile amid protests across the country over race and an ongoing standoff between Washington and Beijing.
U.S. manufacturing activity eased off an 11-year low in May, an Institute for Supply Management (ISM) survey showed, the strongest sign yet that the worst of the economic downturn was behind as businesses reopen.
“With the economic data beginning to ease off from their dire position two months ago, there is further upside as we head into the summer, which is normally a fairly difficult period for markets,” said Chris Beauchamp, chief market analyst at IG.
The three main indexes had opened lower as National Guard troops were deployed over the weekend in 15 states and Washington, D.C. in an attempt to quell a sixth night of violence that began with peaceful protests over the death of a black man, George Floyd, in police custody.
Further denting the sentiment, reports said China had told state-owned firms to halt agricultural purchases from the United States, after Washington said it would eliminate special treatment for Hong Kong to punish Beijing.
“The tensions between the United States and China and the U.S. protests are beginning to make investors a little bit nervous,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
The escalation in Sino-U.S. tensions poses a major threat to the stock market’s rebound since late March that was powered by expectations of a recovery from the coronavirus-led downturn.
U.S. stocks had rebounded late in Friday’s session, with the S&P 500 logging its biggest two-month percentage gain since 2009, after President Donald Trump’s measures