By Alexander Osipovich and Joe Wallace 

A rally in U.S. stocks came to an abrupt halt Thursday after President Trump said he would hold a press conference on China, raising jitters about a fresh standoff between the world's two largest economies.

The Dow Jones Industrial Average fell 147.63 points, or 0.6%, to 25400.64, reversing course after two days of gains earlier this week.

The blue-chip index had been up more than 210 points prior to Mr. Trump's comments on Thursday afternoon. The president said he would announce a response to China's push for tighter security controls on Hong Kong.

The S&P 500 gave up its gains to close down 6.40 points, or 0.2%, to 3029.73. The technology-heavy Nasdaq Composite declined 43.37 points, or 0.5%, to 9368.99.

Recent moves by Washington and Beijing have fueled concerns about a renewed U.S.-China trade war, even as both economies are still reeling from the impact of the coronavirus pandemic.

China forged ahead Thursday with a resolution to impose national-security laws on Hong Kong in a bid to crush anti-Beijing protests. That came a day after the House of Representatives passed a bill to sanction Chinese officials involved in the suppression of Muslim minority groups, and the State Department determined that Hong Kong no longer has a high degree of autonomy from China -- a move that could open the way for Mr. Trump to revoke special arrangements on trade.

"It's just another potential concern on top of Covid," said Brian O'Reilly, head of market strategy at Italian asset manager Mediolanum. "Whether we actually get into trade war 2.0 -- I think even in a second term for Trump, they'd be reticent to go down that path."

Hong Kong's Hang Seng Index fell 0.7%, even as most other Asian and European indexes posted gains. The pan-continental Stoxx Europe 600 rose 1.6%, while Japan's Nikkei 225 jumped 2.3%.

New data Thursday showed U.S. workers filed just over 2.1 million jobless claims last week, extending a downward trend, but still at sharply elevated levels from before the pandemic.

States and cities have been moving ahead with plans to let businesses reopen, fueling hopes that the economy has turned a corner. Fresh data showed U.S. gross domestic product fell at a 5% rate in the first quarter, slightly steeper than initially estimated and the largest quarterly rate of decline since the last recession.

"There is some optimism that the U.S. economy is moving forward," said Jeffrey Schulze, an investment strategist at ClearBridge Investments. "It's also important that there are no signs of a second wave of infections."

In corporate news, Dollar Tree shares jumped $10.11, or 12%, to $97.64 after the discount retailer posted stronger-than-expected earnings for the first quarter, boosted by a surge in demand for essential goods as homebound consumers stocked up during the pandemic.

Shares of Boeing rose 30 cents, or 0.2%, to $149.82 after the aerospace giant laid out plans to cut more than 13,000 jobs.

HP shares fell $2.11, or 12%, to $15.01 after the information-technology company's first-quarter profit fell and it pulled financial projections for the year.

Major U.S. indexes have recovered in recent weeks to levels last seen in early March. Now, a key question for investors is whether economically sensitive stocks can extend their recent rally, said Hugh Gimber, a strategist at J.P. Morgan Asset Management.

"It's been the most beaten-up sectors that have really caught the bounce, " he said, pointing to gains for shares in U.S. banks and travel companies.

The rally in shares of technology companies has paused in recent days, having powered much of the recovery in U.S. stocks since March. They could come under further pressure from an executive order that Mr. Trump signed on Thursday. The order seeks to limit the broad legal protection that federal law currently provides social-media and other online platforms.

Twitter shares dropped $1.47, or 4.4%, to $31.60. Mr. Trump lashed out at the company this week after it added fact-checking notices to two of his tweets.

Stocks are likely to pull back at some point given the degree of uncertainty surrounding the global economy as lockdown measures are relaxed, said Michael Drummey, head of U.S. equity risk trading at Mizuho Americas LLC. "The market is acting in a way that doesn't really line up with that uncertainty," he said. "We have a FOMO rally -- a fear of missing out."

U.S. oil futures rose 2.7% to settle at $33.71, despite a larger-than-expected increase in U.S. crude inventories.

The yield on 10-year U.S. Treasury bonds rose to 0.703%, from 0.677% on Wednesday, as investors sold government bonds. Bond yields move in the opposite direction from prices.

Frances Yoon contributed to this article.

Write to Alexander Osipovich at alexander.osipovich@dowjones.com and Joe Wallace at Joe.Wallace@wsj.com

(END) Dow Jones Newswires

May 28, 2020 16:59 ET (20:59 GMT)

Copyright (c) 2020 Dow Jones & Company, Inc.