MANHATTAN (CN) — The relief from the dropping number of Covid-19 cases nationwide and reduction in stay-at-home orders nationwide over the Memorial Day weekend has carried through to mid-week.
Not even the continuing crackdown in Hong Kong by China — and subsequent warnings by U.S. officials — did much to siphon gains from Wall Street on Wednesday.
The Dow Jones Industrial Average, which leapt up 350 points at the opening bell, closed up an additional 200 points to finish out the day. The S&P 500 and Nasdaq, the latter of which was in negative territory for a short period on Wednesday, also gained lesser amounts.
Initially, gains were thought to be driven by a 750-billion-euro recovery fund fiscal package proposed by the European Commission. In the package, the commission will borrow funds on the financial markets and channel the funds through European Union various programs.
Some northern European countries, most notably Denmark, Sweden and Switzerland, initially had opposed the idea but had grown receptive to using loans and grants to help out beleaguered southern European nations.
“This is Europe’s moment,” European Commission President Ursula von der Leyen said in a statement. “Our willingness to act must live up to the challenge we are all facing.”
But the specter of a new economic cold war with China still leers over markets.
White House officials hinted at pending sanctions against China for its recent attempts to impose greater control over Hong Kong. U.S. Secretary of State Mike Pompeo said China’s moves meant that Hong Kong was no longer autonomous. “While the United States once hoped that free and prosperous Hong Kong would provide a model for authoritarian China, it is now clear that China is modeling Hong Kong after itself,” Pompeo said.
Last week China announced it would ban secession and foreign interference in Hong Kong, threatening to end the “one country, two systems” policy that has been in place since 1997. That policy recognized Hong Kong as part of China but allowed the city to keep its own administrative systems and capitalist economy.
President Trump had told reporters during a news briefing on Tuesday that he would take action against China later this week, but he declined to say whether such action would include sanctions or something more. “We’re doing something now. I think you’ll find it very interesting,” the president said.
Other lawmakers have kept the heat on China. During a Heritage Foundation webcast on proposed deregulatory efforts Wednesday, Texas Senator Ted Cruz said that the United States should ramp up efforts to decouple its economy from China’s and draft tax and regulatory policies to make it easier for critical infrastructure to stay in the United States.
“Personally I think it is foolish to allow ourselves to be so dependent on China for our supply chain,” the Republican Cruz said, noting that China has monopolized manufacturing many pharmaceuticals.
“The vulnerability of that was highlighted during the pandemic when one state-owned newspaper in China explicitly threatened to cut off pharmaceuticals from the United States as a tool of economic warfare,” Cruz continued. “That’s not just economic warfare, that’s actual real warfare. That’s cutting off needed medicine and literally threatening the lives potentially of millions of Americans.”
China for its part has called U.S. furor over Hong Kong a “nothingburger,” saying no meaningful action will be taken. “The White House claimed it would impose sanctions on China, but the tools and resources at its disposal are fewer than those it could mobilize before the outbreak,” the country wrote in an editorial in the state-run Global Times. “It is only bluffing.”
The United States already has taken several measures against China, including adding two dozen foreign companies to its “Entity List,” which prohibits them from exporting or transferring certain items, and scrutinizing four state-controlled telecommunications companies.
The Trump administration, which once lauded China’s handling of the pandemic, has increasingly blamed the communist country for the spread of Covid-19 and at times even insinuated it may have deliberately spread the virus.
More than 5.6 million cases of Covid-19 have been reported worldwide, of which 353,000 have died, according to data compiled by Johns Hopkins University. In the United States, nearly 1.7 million people have contracted the virus, while more than 99,000 have died.