Global Stocks Sink After Tech Giants Report Earnings
May 01 2020 - 6:18AM
Dow Jones News
By Avantika Chilkoti and Stuart Condie
Global stocks slumped Friday after Apple and Amazon.com reported
earnings that highlighted the impact the coronavirus pandemic is
having on the world's biggest companies.
Futures linked to the S&P 500 fell 1.8% early Friday,
suggesting U.S. markets could open lower and extend Thursday's
losses. The U.K.'s FTSE100 dropped 2.4%. Japan's Nikkei 225 closed
down 2.8% and Australia's S&P/ASX 200 closed 5% lower. Markets
in China, Hong Kong and across most of Europe were closed globally
for the May Day holiday.
On Thursday, Amazon announced record revenue but disappointed on
profits as coronavirus-related costs such as employee testing and
higher wages added to expenses. Apple held off on providing
guidance for the current quarter for the first time since late
2003. Both stocks have led markets higher in recent weeks.
"The biggest risk to markets from here is if the market starts
to question the resilience of the big tech stocks," said Mike Bell,
global market strategist at J.P. Morgan Asset Management.
After reporting earnings, shares in Apple dropped 3.2% and
Amazon fell 5.4% in off-hours trading.
U.S. stock benchmarks clocked their largest percentage gains
since 1987 last month. The S&P 500 was up 12.7% in April, while
the Dow Jones Industrial Average gained 11.1%. The tech-heavy
Nasdaq Composite jumped 15.5%, its biggest monthly gain since June
2000.
"If you have been involved in the market, there's a few reasons
to take a little bit off the table and a pullback would be
healthy," said Chris Weston, head of research for Pepperstone
brokerage in Australia.
Investors will watch closely as a string of companies publish
results Friday, including energy majors Exxon Mobil and
Chevron.
The Institute for Supply Management is set to publish its
manufacturing index reading for April later Friday. Analysts
predict a sharp contraction as supply-chains were disrupted and
demand for factory goods plummeted.
Brent crude, the global oil benchmark, dropped 0.8% to $26.26 a
barrel, a muted move given wild swings in energy markets in recent
weeks. Analysts expect demand for fuel to rise as lockdown rules
are gradually lifted and supply eases as output cuts agreed by the
Organization of the Petroleum Exporting Countries come through.
The yield on the 10-year U.S. Treasury note fell to 0.600% from
0.619% Thursday. Yields fall as bond prices rise.
Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com
(END) Dow Jones Newswires
May 01, 2020 06:03 ET (10:03 GMT)
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