Wall Street tumbles as renewed tariff threat adds to uncertainties

  • Markets
  • Saturday, 02 May 2020

NEW YORK (Reuters) - Wall Street sold off sharply on Friday after President Donald Trump revived a threat of new tariffs against China in response to the COVID-19 pandemic, which has brought global economies to a grinding halt.

All three major US stock averages closed down well over 2%, and for the week they all lost ground.

May is often marked by sell-offs, and on the month's first day, with jitters on the rise as some US states begin easing coronavirus shutdowns, the adage held true.

"Markets had a very strong April as they looked through the valley of economic weakness to a point when stimulus will reignite economic growth," said David Carter, chief investment officer at Lenox Wealth Advisors in New York.

"But it could be a longer and deeper valley than many hoped."

Indeed, stocks had a remarkable run in April, with the S&P 500 and the Dow both posting their strongest monthly percentage gains in 33 years.

Trump said his administration was crafting retaliatory measures against China as punishment for the coronavirus outbreak, once again sparking tariff fears that rattled markets through much of the last two years.

Trump has blamed China for what he says is "misinformation" when the virus emerged from the Chinese city of Wuhan and then quickly spread around the world.

"Trump poking China was the last thing markets needed given so much present economic and financial uncertainty," Carter added.

A mixed bag of earnings, particularly a disappointing report from Amazon.com, along with a fresh round of dismal economic data, also weighed on sentiment.

U.S. manufacturing activity skidded to an 11-year low last month as lockdowns shuttered factories, according to the Institute for Supply Management's purchasing managers index.

The Dow Jones Industrial Average fell 622.03 points, or 2.55%, to 23,723.69, the S&P 500 lost 81.72 points, or 2.81%, to 2,830.71, and the Nasdaq Composite dropped 284.60 points, or 3.2%, to 8,604.95.

All 11 sectors of the S&P 500 closed in the red, with energy companies suffering the largest percentage drop.

The corporate reporting season has crossed the midpoint, with 275 of the companies in the S&P 500 having reported quarterly results. Of those, 68% have beaten consensus estimates.

In aggregate, first-quarter S&P 500 earnings are seen having fallen 12.7% from a year ago, a stark reversal from the 6.3% annual growth forecast that stood on Jan. 1.

Tesla Inc plunged 10.3% after company Chief Executive Elon Musk said in a tweet that the electric car maker's stock price was "too high."

Amazon.com shares slid 7.6% after the online retailer warned pandemic-related expenses could lead to its first quarterly loss in five years.

Apple Inc's quarterly results beat expectations, but the iPhone maker declined to provide current-quarter forecasts. Its shares lost 1.6%.

Exxon Mobil dropped 7.2% after the company reported a drop in profit due to a massive $3 billion writedown on plummeting oil demand and prices.

Rival Chevron Corp posted a 38% profit increase, boosted by asset sales, and slashed spending plans. Its shares dipped 2.8%.

Declining issues outnumbered advancing ones on the NYSE by a 5.23-to-1 ratio; on Nasdaq, a 4.40-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and two new lows; the Nasdaq Composite recorded 17 new highs and 12 new lows.

Volume on U.S. exchanges was 10.17 billion shares, compared with the 12.19 billion average over the last 20 trading days.

Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3


Next In Business News

Ringgit slips on resurgence of Covid-19 cases
Quick take: Malayan Cement shares fall on news of private placement
RHB lowers target price on Bursa Malaysia on normalising trading value
Quick take: WZ Satu jumps 31% to highest in 17 months
Slight profit-taking weighs on FBM KLCI
Trading ideas: Paramount, UMW, WZ Satu, Malayan Cement
City of London Brexit hit worse than expected
Multiple US trade partners risk 'manipulator' label in Yellen's first currency report
Oil price up to fresh 4-week highs as demand outlook improves
GLOBAL MARKETS-World stocks rally as Treasury yields tumble

Stories You'll Enjoy