U.S. markets and stock exchange traded funds plunged Friday after tech giants revealed the negative effects of the coronavirus pandemic on their businesses and President Donald Trump threatened another round of tariffs on China over the current crisis.
On Friday, the Invesco QQQ Trust (NASDAQ: QQQ) was down 3.2%, SPDR Dow Jones Industrial Average ETF (NYSEArca: DIA) fell 2.4%, and SPDR S&P 500 ETF (NYSEArca: SPY) dropped 2.9%.
While Amazon.com enjoyed record revenue in the first quarter, the e-commerce giant showed disappointing profits due to coronavirus-related costs from employee testing and higher wages added to expenses, the Wall Street Journal reports.
Apple also held off on forward-looking guidance for the current quarter for the first time since 2003 because of the ongoing uncertainty related to the coronavirus outbreak.
“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,” Brian O’Reilly, Head of Market Strategy for Mediolanum International Funds, told the WSJ.
Further fueling the market rout on Friday, Trump threatened new levies on Beijing for the country’s response in containing the coronavirus as a U.S. intelligence agency investigates whether COVID-19 may have escaped a laboratory in Wuhan.
“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,” Joseph Little, chief global strategist at HSBC Global Asset Management, told the WSJ.
The Federal Reserve also warned of further risks ahead earlier in the week, highlighting the potential for greater economic deterioration but assuring it would use tools to support the economy.
The viral outbreak has inflected deep cuts into the U.S. economy. Consumer spending, the U.S. economy’s key driver, suffered its biggest monthly decline on record in March. The economy contracted in the first quarter at its quickest pace since the last recession. Millions of more Americans filed for unemployment benefits last week.
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