Dow plunges 600 points after Trump threatens new tariffs on China in retaliation for coronavirus pandemic
- Wall Street stock indexes dropped sharply on Friday after Trump’s threat
- It follows the best month for the S&P 500 since the 1980s
- New data showed U.S. manufacturing activity plunged to an 11-year low in April
- Apple and Amazon became the latest companies to warn of more pain
- Here’s how to help people impacted by Covid-19
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U.S. stock indexes slid on Friday after President Donald Trump threatened to slap new tariffs on China over the coronavirus crisis, while Apple and Amazon became the latest companies to warn of more pain in the future.
At the closing bell, the Dow Jones Industrial Average was down 622.03 points, or 2.55 percent, at 23,723.69. The S&P 500 dropped 2.81 percent and the Nasdaq composite lost 3.2 percent, both near session lows.
Trump said late on Thursday his trade deal with China was now of secondary importance to the pandemic, as his administration crafted retaliatory measures over the outbreak.
He said that after seeing evidence that the outbreak began after the virus escaped from a Chinese virology lab, he was considering punitive tariffs on $1 trillion worth of imports from China.
The US flag is seen at the New York Stock Exchange on Thursday. Stocks ended April with their biggest monthly gains since the 1980s, but sank again on Friday
Trump’s threat pulled 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.
Meanwhile, new data showed U.S. manufacturing activity plunged to an 11-year low in April as the pandemic wreaked havoc on supply chains, suggesting the economy was sinking deeper into recession.
The survey from the Institute for Supply Management (ISM) on Friday added to a raft of grim data this week, including a collapse in consumer spending in March and a surge to 30.3 million in the number of Americans who have filed claims for unemployment benefits in the last six weeks.
The ISM said its index of national factory activity dropped to a reading of 41.5 last month, the lowest level since April 2009, from 49.1 in March. A reading below 50 indicates contraction in the manufacturing sector, which accounts for 11% of the U.S. economy.
The monthly decline in the ISM index was the biggest since October 2008.
Robert Glorioso, The New York Stock Exchange chief of building engineering operations, rings the opening bell on Friday to thank Samantha Moriarty and the GE Healthcare team from Melrose, Massachusetts who continue to ensure ventilators are operating safely
Vice President Mike Pence tours a GM plant in Indiana on Thursday where ventilators are being made. Overall, US manufacturing is at its lowest level since April 2009
‘The backdrop for manufacturers is very bleak, with collapsing global demand, ongoing supply chain disruptions, and high levels of uncertainty all posing very significant challenges,’ said Oren Klachkin, lead U.S. economist at Oxford Economics in New York. ‘We do not expect output losses to be recouped until 2021.’
Also weighing on sentiment was a 2.6 percent fall in Apple shares in premarket trading after the company said it was impossible to forecast overall results for the current quarter, even as it reported upbeat quarterly results.
Amazon shares tumbled 5 percent after the company 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.
Clorox reported its biggest sales increase in nearly a decade, helped by a surge in sales of disinfectants. Shares rose 6.7 percent in premarket.
Sales in the company’s cleaning division, which makes up nearly 38 percent of total sales and includes its namesake bleach products as well as Formula 409 and Pine-Sol, surged 32 percent in the first quarter.
Clorox reported its biggest sales increase in nearly a decade, helped by a surge in sales of disinfectants during the coronavirus pandemic
In their earnings reports on Friday morning, Exxon Mobil and Chevron said they are slamming the brakes on U.S. shale oil production at a time when crude prices and fuel demand have plunged due to global lockdowns.
Exxon posted a $610 million first-quarter loss, its first quarterly loss in three decades, on a nearly $3 billion inventory writedown reflecting lower margins and prices.
Chevron posted a $3.6 billion profit on asset sales and improved refining results, and also said it would further reduce spending this year.
United Airlines stock sank 4.7 percent as the company posted a $1.7 billion loss, its biggest since 2008. The loss was expected, since United said last week that it suffered a pretax loss of $2.1 billion.
The airline is shrinking its flight schedule by 90 percent in May and probably a similar amount in June.