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* Indexes set to gain between 2.5% to 2.8% for the week
* Alibaba slips despite upbeat earnings report
* Splunk jumps after forecasting higher cloud demand
* Indexes fall: Dow 0.56%, S&P 0.33%, Nasdaq 0.19% (Adds details, comments, updates prices)
By Ambar Warrick and Pawel Goraj
May 22 (Reuters) - U.S. stock indexes dropped on Friday as Sino-U.S. tensions weighed on markets struggling to gauge the pace of economic recovery from the coronavirus.
President Donald Trump’s statement on China’s plan for a national security law in Hong Kong on Thursday raised concerns over Washington and Beijing possibly reneging on their Phase-1 trade deal.
Fears of a renewed trade war cut short Wall Street’s April rally that was powered by optimism over a potential COVID-19 vaccine and the U.S. economy gradually emerging from the lockdowns.
The three main U.S. stock indexes have kept to a tight range in May, but are still on course for weekly gains between 2.5% and 2.8%.
“It’s a bit of a push-pull as there’s some positive news from a healthcare perspective at least, but then we also have the rhetoric ramping up with China,” said Paul Nolte, portfolio manager at Kingsview Asset Management in Chicago.
“Investors may be a little bit nervous, may pull in their horns ahead of a three-day weekend.”
At 11:23 a.m. ET, the Dow Jones Industrial Average was down 137.22 points, or 0.56%, at 24,336.90, the S&P 500 was down 9.75 points, or 0.33%, at 2,938.76 and the Nasdaq Composite was down 18.07 points, or 0.19%, at 9,266.81.
Eight of the 11 major S&P 500 sub-indexes were trading lower, led by energy as oil prices sank 5%.
Real Estate stocks were up in some defensive plays, while losses were limited in the consumer staples sector.
Mixed retail earnings from Walmart Inc, Best Buy Co Inc and Home Depot Inc earlier in the week had shown online shopping gaining traction due to the stay-at-home orders, a trend that could damage brick-and-mortar players.
On Friday, Chinese e-commerce giant Alibaba Group reported better-than-expected quarterly profit, but its shares slipped 4.4%. Smaller rival Pinduoduo Inc’s U.S.-listed shares gained 9.6% after posting upbeat earnings report.
Hewlett Packard Enterprise fell 11.5% after missing second-quarter revenue and profit estimates, hit by global lockdowns since February.
Data analytics software maker Splunk Inc rose 10.7% after saying it expects higher demand for its cloud services as people around the world take to working from home.
Declining issues outnumbered advancers 1.9-to-1 on the NYSE and nearly matched them on the Nasdaq.
The S&P index recorded three new 52-week highs and no new low, while the Nasdaq recorded 37 new highs and six new lows. (Reporting by Ambar Warrick in Bengaluru and Pawel Goraj in Gdansk; Editing by Sagarika Jaisinghani and Arun Koyyur)