Stocks slump as coronavirus hits big tech, oil earnings
NEW YORK - Equity investors kicked into sell mode on the first trading day of the month as Big Tech and Big Oil warned that COVID-19 is hurting business during their quarterly earnings updates.
The Dow Jones Industrial Average dropped 622 points, or 2.5 percent, while the S&P 500 and the Nasdaq Composite tumbled 2.81 percent and 3.2 percent, respectively. The losses come just a day after both the Dow and S&P 500 wrapped up their strongest month in over 33 years.
The COVID-19 pandemic has rattled a broad array of industries, with companies from Amazon to Apple, Exxon Mobil and Chevron all detailing the effects of the pandemic.
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The Trump administration is reportedly considering a wide array of options, including tariffs, to hold China accountable for the health crisis and economic damage caused by the virus.
“We signed a trade deal where they're supposed to buy, and they've been buying a lot, actually. But that now becomes secondary to what took place with the virus," President Trump told reporters on Thursday. "The virus situation is just not acceptable." The White House did not elaborate on Friday.
Looking at stocks, Amazon reported that sales soared 26 percent year-over-year in the first quarter as consumers stayed home and ordered more products online due to COVID-19, but rising costs related to the pandemic ate away profit.
Apple beat on both the top and bottom lines as strong growth in the company’s services business provided a boost while stores were shuttered worldwide, but the tech giant suffered supply-chain difficulties due to COVID-19. CEO Tim Cook said the company could not provide a forecast due to the uncertainty caused by the pandemic.
Elsewhere, Chevron took further steps to protect its dividend, deepening cuts to capital spending and reducing operating expenses. The integrated oil company earned $3.6 billion for the quarter, but warned results would mean “depressed” so long as oil prices remained low.
Rival Exxon Mobil took a $2.9 billion writedown, resulting in a $610 million loss, as “stay-at-home” orders given to slow the spread of COVID-19 caused a sharp drop in demand.
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Meanwhile, Clorox reported that sales surged 15 percent from a year ago as all of its business segments saw increased demand.
Planemaker Boeing won’t be seeking government assistance after raising $25 billion through a seven-part bond offering. The planemaker earlier this week reported a $641 million quarterly loss, which it attributed to COVID-19 and the grounding of the 737 MAX.
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Commodities were mixed, with West Texas intermediate crude oil up 4.99 percent at $19.78 a barrel as production cuts agreed to by the world’s largest producers are set to begin on Friday. Gold rose 0.61 percent to $1,694.50 an ounce.
U.S. Treasurys edged higher, pushing the yield on the 10-year note down to 0.641 percent.
In Europe, Britain’s FTSE fell 2.34 percent while most of the major indexes were closed for the May Day holiday.
In Asia, Japan’s Nikkei shed 2.84 percent while China’s Shanghai Composite and Hong Kong’s Hang Seng were closed.
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