By Avantika Chilkoti, Stuart Condie and Gunjan Banerji 

U.S. stocks slumped Friday after Amazon.com and Apple reported results that highlighted the impact the coronavirus pandemic is having on the world's biggest companies.

The S&P 500 fell 2.9% in recent trading, extending Thursday's losses. The Dow Jones Industrial Average shed about 580 points, or 2.4%. The Nasdaq Composite lost 3.4%.

Amazon posted record revenue late Thursday 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, helping major indexes recover from their lows in March.

"It's a warning shot across the bow that no company is immune from this even if you're able to raise your top-line revenues," said Brian O'Reilly, head of market strategy for Mediolanum International Funds.

Shares of Amazon fell about 7.3%. Apple shares slipped in early trading and recently ticked up 0.2%.

A busy week of corporate earnings and new economic data drove stock swings this week. Earlier in the week, the Federal Reserve warned of greater economic deterioration ahead but said it would use its tools to support the economy.

U.S. stock benchmarks clocked their largest percentage gains since 1987 last month. The S&P 500 was up 13% in April, while the Dow Jones Industrial Average gained 11%. The tech-heavy Nasdaq Composite jumped 15%, 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.

Adding to investor jitters Friday were concerns about fresh tensions between the U.S. and China. In an unusual public statement, a U.S. intelligence agency said Thursday that it was investigating whether the coronavirus may have escaped from a laboratory in Wuhan, China.

"The important thing for investors is that these tensions around trade, these tensions around technology and technology transfers, and tensions around geopolitics more broadly, these issues are going to persist and maybe even heighten as we go forward," said Joseph Little, chief global strategist at HSBC Global Asset Management.

This week, new data showed the intense toll the coronavirus is having on the domestic economy. Consumer spending, the U.S. economy's key driver, posted its biggest monthly decline on record in March. The U.S. economy shrank in the first quarter at its fastest pace since the last recession, and millions of Americans filed for unemployment benefits last week. About 12% of the U.S. workforce was covered by unemployment benefits in the April 18 week, a record high dating back to the 1970s.

"For people that would be considering investing, it was a reality check, " said Don Dale, managing partner at investment firm Equity Risk Control Group.

Shares of Chevron and Exxon Mobil ticked down 4.6% and 5.8%, respectively, after the companies reported a drop in demand on the back of shelter-in-place rules. The energy companies also said they would both cut back capital spending plans for 2020.

Clorox gained 5% after the household-supplies producer issued more optimistic guidance for the 2020 fiscal year on higher demand for cleaning supplies amid the coronavirus pandemic.

Mike Bell, global market strategist at J.P. Morgan Asset Management, said the recent rally in U.S. stocks didn't reflect the gloomy picture painted by economic data.

"There is such a risk from here that perhaps the reopening of the economy, at least in a sustained way, takes longer than the market and people had hoped for," said Mr. Bell.

Brent crude, the global oil benchmark, slipped 1.6% to $26.07 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 U.K.'s FTSE 100 dropped about 2.3%. Japan's Nikkei 225 closed down 2.8% and Australia's S&P/ASX 200 ended 5% lower. Markets in China, Hong Kong and across most of Europe were closed for the May Day holiday.

Write to Avantika Chilkoti at Avantika.Chilkoti@wsj.com and Gunjan Banerji at Gunjan.Banerji@wsj.com

 

(END) Dow Jones Newswires

May 01, 2020 13:51 ET (17:51 GMT)

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