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Dow, S&P 500 surge late, set new highs as SEC tightens noose on Chinese stocks

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Wall Street looked like it was going to close the week in tame fashion, but buyers rushed in during the final hour to send all the major indices to strong gains.

The Dow Jones Industrial Average (+1.4% to 33,072) and the S&P 500 (+1.7% to 3,974) were both en route to modest gains, and then a final-hour rally propelled them to new all-time highs.

The industrial average was led by Cisco Systems (CSCO, +4.1%), Nike (NKE, +3.4%) and Intel (INTC, +4.6%). The latter joined in a broad semiconductor rally that included Qualcomm (QCOM, +4.5%), Broadcom (AVGO, +4.4%), and Texas Instruments (TXN, +5.4%) to help the Nasdaq Composite (+1.2% to 13,138) flip from red to green in the late afternoon.

Tesla (TSLA) declined 3.4% despite CEO Elon Musk’s best efforts to prop it up – Musk tweeted there’s “a >0% chance Tesla could be the biggest company,” then followed it up with another tweet saying “Probably within a few months” that he quickly deleted.

Comcast (CMCSA, -2.0%) dropped after DAZN Group, known as “the Netflix of sport,” outbid Comcast’s Sky division for a major Italian soccer contract.

U.S. crude oil futures sprang back again, jumping 4.8% to settle at $61.35 per barrel.

Meanwhile, a new Securities and Exchange Commission rule that will require foreign companies to submit documentation about government affiliations and government influence is causing headaches for China investors.

China stocks have been in correction mode for several weeks, but the new rule is exacerbating the rout, particularly those with listings in the U.S.

Lately , major Chinese stocks such as GSX (-57%), Tencent Music (-36%), Vipshop (-34%), Baidu (-22%), Bilibili (-12%), Trip.com (-11%) and Alibaba (-6%) have displayed bearish tendencies.

While the new SEC rules apply to all foreign-listed companies, they are specifically aimed at China, which has repeatedly run afoul of efforts by U.S. regulators to monitor the audits of Chinese companies.

This week, the SEC adopted interim final amendments to implement the Holding Foreign Companies Accountable Act. Under the new rules, companies will be required to submit documents to establish that they are not owned or controlled by a governmental entity in a foreign jurisdiction.

Chinese companies will also have to name each board member who is a Chinese Communist Party official.

If the companies fail to comply after three years, U.S. regulators could delist the companies.

Pressure is not just coming from U.S. regulators. In November, Chinese regulators stunned investors thereby nixing Ant Group’s IPO at the last minute.

Since then, Chinese officials have repeatedly expressed concerns about inflated stock prices and excessive leverage in the system.

Chinese regulators have recently fined some of the largest tech giants, including social media firm Tencent Holdings, search engine Baidu, and ride-hailing company Didi Chuxing, among others, for violation of China’s anti-monopoly laws, claiming it was protecting consumer interests.

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