By C Nivedita and Shreyashi Sanyal
(Reuters) – U.S. stocks fell on Friday after President Donald Trump threatened to impose new tariffs on Beijing over the coronavirus crisis, while business warnings from Amazon.com and big oil firms highlighted the pain inflicted by global lockdowns.
Trump’s threat brought attention back to the trade war between the world’s two largest economies that has kept global financial markets on tenterhooks for nearly two years.
“It will not be easy to repair corporate carnage after this perfect storm,” said Peter Cecchini, chief market strategist at Cantor Fitzgerald in New York.
“The trade war mattered because the stress was not with the consumer this time; it was within companies’ balance sheets.”
The consumer discretionary subindex slid 4.8%, after Amazon.com Inc said it could post its first quarterly loss in five years as it was spending at least $4 billion in response to the coronavirus pandemic. The e-commerce giant’s shares tumbled 7.6%.
The energy index fell 5.8% as big oil firms Exxon Mobil and Chevron Corp said they are slamming the brakes on U.S. shale oil production, hurt by crashing oil prices.
Apple Inc dipped 0.2% after Chief Executive Officer Tim Cook said it was impossible to forecast overall results for the current quarter because of uncertainty created by the virus.
The S&P 500 technology index shed 2.3%, led by declines in trade-sensitive chip stocks. The Philadelphia Semiconductor index fell 5.1%.
With nearly half of the S&P 500 companies having reported results so far, analysts expect a 12.7% fall in profits for the first quarter and an even sharper decline of 37.8% for the current quarter.
Still, aggressive stimulus measures and hopes of reopening the economy from virus-induced curbs have helped the S&P 500 index post its best month in 33 years in April. The benchmark index is now nearly 20% away from reclaiming a record high hit in February.
At 12:22 p.m. ET the Dow Jones Industrial Average was down 576.41 points, or 2.37%, at 23,769.31, the S&P 500 was down 83.03 points, or 2.85%, at 2,829.40 and the Nasdaq Composite was down 294.86 points, or 3.32%, at 8,594.69.
U.S. manufacturing activity plunged to an 11-year low in April, supporting analysts’ views the economy was sinking deeper into recession. However, the Institute for Supply Management’s (ISM) index reading of 41.5 last month was a smaller than the expected drop to 36.9.
“It almost seems like the market has taken a vacation from looking at the economic data because of likely all the stimulus and the forward-looking thought of the economy reopening,” said Matt Miskin, co-chief investment strategist at John Hancock Investment Management in Boston.
United Airlines Holdings Inc slipped 9.6% after posting a first-quarter loss of $1.7 billion.
Declining issues outnumbered advancers for a 7.17-to-1 ratio on the NYSE and for a 6.36-to-1 ratio on the Nasdaq.
The S&P index recorded no new 52-week high and two new lows, while the Nasdaq recorded 14 new highs and eight new lows.
(Reporting by C Nivedita and Shreyashi Sanyal in Bengaluru; Editing by Anil D’Silva and Arun Koyyur)