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US President Donald Trump is going to battle against Twitter and Facebook — a move that could weigh on companies whose shares have so far outperformed during the pandemic.

What’s happening: Trump is set to announce an executive order targeting social media companies on Thursday, though it’s not clear what exactly the order will include. The action comes after Twitter applied a fact-check to two of Trump’s tweets, including one that falsely claimed mail-in ballots would lead to widespread voter fraud.

Trump then accused the social media company of censorship, warning that if it continued to tag his messages, he would use the power of the federal government to rein it in or even shut it down.

Twitter (TWTR) shares closed down 2.8% and are off another 3% in premarket trading. Facebook (FB) shares dropped 1.3% Wednesday and are down another 1.5% in premarket trading Thursday.

Legal experts say Trump’s options for cracking down on Twitter and other sites over how they moderate their platforms are somewhat limited, my CNN Business colleague Brian Fung reports.

The most obvious course of action would be for Trump to seek changes to the Communications Decency Act, which shields tech platforms from legal liability for a wide range of online content.

There has been an ongoing push, led by the Justice Department and Republicans in Congress, to do just that. But changing the law would require building broad consensus in a deadlocked Congress. The Trump administration could not go it alone, according to Brian.

Trump could pressure federal agencies to take action against social media companies. But the Federal Trade Commission and the Federal Communications Commission have previously resisted efforts by the White House to regulate political speech.

Investor insight: The president’s clash with tech companies comes at a delicate moment. Unlike most American firms, these companies — which are used to working remotely and do not rely on physical locations for sales — have performed strongly throughout the pandemic and have helped to drive the stock market recovery.

Shares of Google’s Alphabet (GOOG), which owns YouTube, are up 6% this year, while the broader S&P 500 is down 6%. Facebook’s stock has risen more than 11% year-to-date.

China approves controversial Hong Kong national security law

China’s legislature has approved a proposal to impose a highly contentious national security law in Hong Kong, throwing the semi-autonomous city’s future as a major financial center into doubt.

The latest: China’s rubber-stamp parliament, the National People’s Congress, passed the resolution Thursday to enact the sweeping security legislation, which bans sedition, secession and subversion of the central government and allows mainland China’s state security agencies to operate in Hong Kong.

The law has sparked widespread protests in Hong Kong and has been denounced internationally, with opponents warning it could curtail many of the rights and freedoms promised to the city when it was handed from British to Chinese rule in 1997.

It also could threaten a tenuous trade truce between Washington and Beijing. US Secretary of State Mike Pompeo said Wednesday that the United States would no longer consider Hong Kong as autonomous from China for trade and economic purposes.

What it means: “We do not currently expect these developments to directly threaten the Phase One trade deal though pressures are rising,” Eurasia Group analysts said in a note to clients Wednesday. “Tensions over Hong Kong are part of the geopolitical rivalry that has contributed to the recent downturn in the US-China relationship, and introduction of this national security law came more quickly than we expected.”

Market reaction: Hong Kong’s Hang Seng has dropped more than 5% in the past week. Elsewhere, investors have shrugged off the risks, pushing stocks higher.

More stimulus

Europe and Japan are taking big steps to ensure their economies can recover as they begin the gradual process of ending lockdowns.

More stimulus: The European Commission on Wednesday unveiled a plan that would see it raise €750 billion ($825 billion) on financial markets through its 2021-27 budget. Two-thirds of the money would be distributed to countries via grants, while the remainder would be offered as loans.

And Japan is injecting another $1 trillion into its economy. Prime Minister Shinzo Abe’s government on Wednesday approved additional relief, doubling the amount previously committed in April.

Europe’s plan still needs to be approved by the 27 EU member states, with the aid unlikely to arrive before 2021. But the moves are a sign that countries aren’t shying away from unprecedented help at a moment of dire need. That’s helping support investor sentiment as restrictions on movement ease.

“The sweet spot for a risk-on rotation is now, as economies reopen and more fiscal programs are implemented,” Evercore ISI’s Dennis DeBusschere told clients.

Up next

The number of initial US unemployment claims filed last week arrives at 8:30 a.m. ET. Economists surveyed by Refinitiv expect another 2.1 million.

Also today: US durable goods orders for April and the second estimate of US GDP for the first quarter also post at 8:30 a.m. ET.

Coming tomorrow: US personal income and spending data, along with the latest reading of the University of Michigan’s consumer sentiment survey, will shine a light on consumer behavior at a crucial juncture.