• May manufacturing expanded in China.
  • Dozens of cities across the U.S. disrupted by anti-police riots and looting.
  • Traders worried about Hong Kong losing special trade status

Update: 12:05 p.m. EDT:

U.S. stocks recovered from earlier losses at noon on Monday.

The Dow Jones Industrial Average gained 65.85 points to 25,448.96, while the S&P 500 rose 7.39 points to 3,051.70 and the Nasdaq Composite Index advanced 41.05 points to 9,530.92.

The Institute for Supply Management said on Monday that its index of national factory activity edged up to 43.1 in May from 41.5 in April, which itself was an 11-year low.

The Commerce Department said that U.S. construction spending fell by 2.9% in April, after a flat reading in March.

In Europe markets finished mixed, as Britain’s FTSE-100 rose 1.48%, France’s CAC-40 gained 1.43% and Germany’s DAX dropped 1.65%.

Original story:

U.S. stocks opened lower on Monday as traders worried over rising tensions with China over Hong Kong amid continuing riots in the U.S. protesting police brutality.

The Dow Jones Industrial Average dropped 84.09 points to 25,229.02, while the S&P 500 fell 11.43 points to 3,032.88 and the Nasdaq Composite Index tumbled 24.86 points to 9,465.01.

States across the country were reopening their economies, while protests against the killing by police of unarmed black mam George Floyd swept across dozens of cities.

Market sentiment was also weighed down by increasing hostility between the U.S. and China after President Donald Trump said he would revoke Hong Kong’s special trade status in response to Beijing’s controversial new security law for the city-state.

The Caixin/Markit Manufacturing Purchasing Manager’s Index – a survey of manufacturing activity in China – amounted to 50.7 for May, indicating expansion.

“May data signaled a further increase in output following February’s record decline, with firms widely mentioning the resumption of works due to an easing of COVID-19 related measures,” said Caixin and IHS Markit jointly. “Data indicated that the fall was largely driven by weaker external demand, as many nations faced strict measures to stop the spread of the pandemic including company closures, leading new export orders to contract at a historically sharp rate.”

“Nothing that has happened since the market closed on Friday has been market-positive,” said Art Hogan, chief market strategist at National Securities. “When you think… we’re beginning to take U.S.-China tensions seriously and you add on to that the massive amount of disruption going on in almost every major city in the country right now, none of that could be seen as market positive. At the levels we’re at, I wouldn’t be surprised to see the market take a pause and pull back.”

More than 6 million cases of coronavirus have been confirmed around the world, including more than 1.7 million in the U.S.

Peter Berezin, chief global strategist at BCA Research, wrote: “The main downside risk facing stocks is a second wave of the disease. If fears of a new outbreak were to escalate, risk assets would suffer.”

Overnight in Asia, markets finished higher. China’s Shanghai Composite gained 2.21%, Hong Kong’s Hang Seng jumped 3.36% and Japan’s Nikkei-225 rose 0.84%.

In Europe markets traded mixed, as Britain’s FTSE-100 rose 0.75%, France’s CAC-40 gained 1.04% and Germany’s DAX dropped 1.65%.

Crude oil futures fell 2.82% at $34.49 per barrel, Brent crude dropped 1.11% at $37.42. Gold futures edged down 0.54%.

The euro edged up 0.14% at $1.1119 while the pound sterling rose 0.51% at $1.2412.