U.S. Stocks Slump After Tech Earnings
U.S. stocks fell on Friday as investors reeled from earnings reports by Apple and Amazon that showed the depth of the coronavirus impact on big business.
The S&P 500 was down more than 2 percent in early trading, dragged lower by shares of tech companies.
Amazon stock fell about 5 percent after the company reported on Thursday that despite surging sales in the first quarter, costs to deliver products amid the pandemic had taken a big bite out of profits. Jeff Bezos, the company’s founder, said the expense of protecting workers, including protective equipment and Covid-19 tests, could swing it into a loss of as much as $1.5 billion in the current quarter.
Apple stock also fell, after the company refused on Thursday to give any estimates for the current quarter. But the tech giant signaled confidence by announcing another big stock buyback, and said that its first-quarter revenue rose nearly 1 percent to $58.3 billion, despite lock-downs in China, where it assembles nearly all of its products.
The emergence of investor doubt could signal a turn for the markets, which have risen despite the steady drumbeat of negative news. Even with a retreat on Thursday, Wall Street closed out the month of April with a nearly 13 percent gain, its best performance since 1987.
While most financial capitals in Asia and Europe were closed on Friday for the celebration of Labor Day, the few that were open fell significantly. In London, the FTSE 100 was down nearly 2 percent, while markets in Australia and Japan were sharply lower. On holidays, markets can be susceptible to big swings because of the relatively few transactions being made.
In the oil markets West Texas intermediate, the U.S. benchmark, gave up gains from earlier in the day and was 2 percent lower, at $18.47 a barrel. The international benchmark, Brent crude, was 2.6 percent higher, at $25.98.