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* Trump makes no mention of Phase One trade deal
* Indexes: Dow down 0.1%, S&P 500 up 0.5%, Nasdaq up 1.3%
(Updates close with two-month gains)
By Caroline Valetkevitch
May 29 (Reuters) - U.S. stocks finished mostly higher on
Friday after President Donald Trump announced measures against
China in response to new security legislation that were less
threatening to the U.S. economy than investors had feared.
The Dow ended the session slightly lower, but all three
indexes rose for the week and registered a second straight month
of gains. The S&P 500 added 17.8% for April and May, its biggest
two-month percentage gain since 2009.
The S&P 500 initially extended losses after Trump said he
was directing his administration to begin the process of
eliminating special treatment for Hong Kong in response to
China's plans to impose new security legislation in the
semi-autonomous territory.
But Trump made no mention of any action that could undermine
the Phase One trade deal that Washington and Beijing struck
early this year, a concern that had cast a cloud over the market
throughout the week.
"He began speaking in a very tough tone," said Chris
Zaccarelli, chief investment officer at Independent Advisor
Alliance in Charlotte, North Carolina. "The market was worried
he was going to announce something substantial, something
detrimental to the U.S. economy. Then, as he spoke, it became
clear the actions being taken were not going to be as dramatic
as originally feared."
Trump also said the United States is terminating its
relationship with the World Health Organization, something he
had threatened to do earlier this month.
S&P 500 technology shares gave the index its
biggest boost, while financials were the biggest drag.
The latest confrontation between the U.S. and China has
fueled concern that worsening tensions between the two world's
largest economies could derail the recent sharp gains in the
stock market.
Expectations of a quick economic recovery from the
coronavirus pandemic have driven the S&P 500 up more than
30% from its March lows.
The Dow Jones Industrial Average fell 17.53 points,
or 0.07%, to 25,383.11, the S&P 500 gained 14.58 points,
or 0.48%, to 3,044.31, and the Nasdaq Composite added
120.88 points, or 1.29%, to 9,489.87.
For the month, the Dow added 3.9%, the S&P 500 gained 4.5%,
and the Nasdaq rose 6.8%. For the week, the Dow and S&P 500 each
rose more than 3%, and the Nasdaq gained 1.8%.
New York Governor Andrew Cuomo said Friday that New York
City is "on track" to enter phase one of reopening on June 8,
and he said five upstate regions will now transition to phase
two.
Federal Reserve Chair Jerome Powell, speaking in a webcast
organized by Princeton University Friday, reiterated the U.S.
central bank's promise to use its tools to shore up the economy
amid the coronavirus pandemic.
Twitter was down 2% and Facebook Inc shares
slipped 0.2%, a day after Trump signed an order threatening
social media firms with new regulations over free
speech.
Upscale department store chain Nordstrom Inc slumped
11% after it reported a near 40% fall in quarterly sales due to
pandemic-led store closures.
Salesforce.com Inc slipped 3.5% as the cloud-based
business software maker cut its annual revenue and profit
forecasts.
Declining issues outnumbered advancing ones on the NYSE by a
1.04-to-1 ratio; on Nasdaq, a 1.04-to-1 ratio favored advancers.
The S&P 500 posted 17 new 52-week highs and no new lows; the
Nasdaq Composite recorded 60 new highs and 14 new lows.
Volume on U.S. exchanges was 13.62 billion shares, compared
to the 11.3 billion average for the full session over the last
20 trading days.
(Reporting by Caroline Valetkevitch in New York; additional
reporting by Sinead Carew; Editing by Leslie Adler and Tom
Brown)