Stocks were lower Friday after the latest batch of corporate earnings results and economic data revealed more damage from the coronavirus pandemic. News late in the session that the U.S. Food and Drug Administration had granted Gilead’s antiviral treatment remdesivir emergency use authorization to treat patients with COVID-19 did little to move the needle on equities.
Earlier, earnings results from some of the most heavily weighted companies in the major U.S. stock indices came in mixed. Amazon (AMZN) posted first-quarter sales that jumped 26% over last year, but warned that $4 billion in expected coronavirus-related costs could drag operating income negative to the tune of $1.5 billion.
Meanwhile, Apple (AAPL) reported quarterly revenue growth that slowed dramatically over last year, and declined to offer an outlook for the first time in years due to uncertainty over the pandemic. The tech-heavy Nasdaq ended Friday’s session lower by 3.2%
Oil giants Exxon Mobil and Chevron each posted weaker results compared to last year as the economic devastation from the coronavirus and recent plunge in crude oil prices weighed on the companies. Exxon Mobil posted its first quarterly loss in decades, and Chevron cut its capital expenditure plans for the year by another $2 billion.
A day earlier, the S&P 500 closed out April with its best monthly gain since 1987. The blue-chip index climbed a total of 12.68% for the month, but was still off 14% from its record high on February 19, and down nearly 10% year to date.
“We forecast further gains in most risky assets between now and the end of next year. This reflects our expectation of a rebound in economic activity starting in the second half of 2020, alongside the continuation of massive monetary and fiscal policy support,” John Higgins, chief markets economist for Capital Economics, wrote in a note Thursday.
“Admittedly, risky assets have already recovered quite a lot of the ground that they lost after the outbreak of coronavirus. And two key downside risks remain,” he added.
“First, success in containing the virus could be reversed as economies reopen. Second, the consensus for policy support might break down,” he said. “But assuming these risks do not materialize, we anticipate that the rally will continue.”
Still, equities are entering what has historically been a tougher six-month period in terms of comparable returns.
During that time frame, the S&P 500 have averaged returns of just 1.5% during the May through October period since 1950, according to LPL Research data, and ended the period higher just 64.3% of the time. In more recent history, however, stocks produced positive gains in seven of the past eight six-month periods between May and October, and as much as 10% during the similar period in 2013.
The recent stock rally comes despite mounting evidence of the damage the coronavirus pandemic and social distancing measures have inflicted on the domestic economy. A government report Thursday showed another 3.8 million Americans filed for new unemployment claims last week, bringing the total over the past six weeks to more than 30 million.
4:06 p.m. ET: Stocks end sharply lower to kick off May
Here’s where the three major indices settled, as of 4:06 p.m. ET:
S&P 500 (^GSPC): -81.72 points (-2.81%) to 2,830.71
Dow (^DJI): -622.03 points (-2.55%) to 23,723.69
Nasdaq (^IXIC): -284.6 points (-3.2%) to 8,604.95
4:00 p.m. ET: FDA confirms remdesivir emergency use authorization
The U.S. Food and Drug administration confirmed President Donald Trump’s earlier remarks that Gilead’s remdesivir antiviral treatment received emergency use authorization for the coronavirus disease for hospitalized patients, according to a statement Friday.
3:50 p.m. ET: Trump says FDA has approved Gilead’s remdesivir for emergency use
President Donald Trump told reporters Friday that Gilead received emergency use authorization for its anti-viral treatment to be used for patients with COVID-19, according to reports from multiple outlets.
Gilead’s stock pared losses of more than 5% earlier in the session to trade about 4% lower, or at about $80 per share.
2:42 p.m. ET: WTI crude settles at two-week high
West Texas intermediate (WTI) crude oil prices rose for a third straight session to settle at a two-week high of $19.78 per barrel. Friday’s gain marked an advance of 5%, or 94 cents per barrel. The commodity’s weekly gain was 14.6%.
Friday’s settlement – the first in May – comes on the heels of a crushing April for crude, with WTI futures at one point turning negative for the first time in history. The commodity had shed 8% for the month of April, and remains lower by 68% for the year to date.
11:18 a.m. ET: Tesla shares sink after Elon Musk tweets ‘stock price is too high’
Tesla’s (TSLA) stock extended earlier declines Friday morning, dropping more than 7% to below $730 per share as of 11:18 a.m. ET, after the electric car-maker’s Elon Musk wrote in a Twitter post that Tesla’s stock price was “too high.”
Tesla’s stock was up nearly 87% for the year to date through Thursday’s close, far outperforming the broader market.
Tesla stock price is too high imo— Elon Musk (@elonmusk) May 1, 2020
The remarks were part of a series of tweets Musk released over a 10-minute period Friday morning. The billionaire also said that he is “selling almost all physical possessions” and will “own no house.” In a Twitter subsequent Twitter post, he said, “Now give people back their FREEDOM.”
Earlier this week, Tesla reported first-quarter sales growth over last year and an unexpected profit. However, the company has been contending with a weekslong temporary suspension of operations at its flagship Fremont, California factory and New York facility amid the COVID-19 pandemic, potentially pressuring results in the current quarter. During a call Wednesday with analysts and investors, Musk went on an expletive-laden diatribe calling for social distancing measures to be quickly rolled back.
10:00 a.m. ET: U.S. manufacturing activity sinks deeper into contraction in April: Institute for Supply Management
The Institute for Supply Management’s (ISM) manufacturing purchasing managers’ index (PMI) slid to 41.5 in April from 49.1 in March. The result was slightly above consensus estimates for a drop to 36.0, however, according to Bloomberg data.
Subindices measuring production, new orders and employment each fell at faster paces relative to March. Prints below the neutral level of 50 indicate contraction in activity.
“Comments from the panel were strongly negative (three negative comments for every one positive comment) regarding the near-term outlook, with sentiment clearly impacted by the coronavirus (COVID-19) pandemic and continuing energy market recession,” ISM said in a statement. “The PMI indicates a level of manufacturing-sector contraction not seen since April 2009, with a strongly negative trajectory.”
9:45 a.m. ET: April Markit U.S. manufacturing PMI sinks to lowest level since 2009 as output drops by a record
IHS Markit’s final U.S. manufacturing PMI for April sank to 36.1 from 48.5, hitting the lowest reading since March 2009 and falling for a second consecutive month.
Beneath the headline index, manufacturing output slumped to 28.8 in April from 46.5 in March, representing a record decline. Readings below the neutral level of 50 indicate contraction in a sector. Meanwhile, new orders fell versus the prior month to the lowest level since January 2009.
"April saw the manufacturing sector struck hard by the COVID-19 pandemic, with output falling to an extent surpassing that seen even at the height of the global financial crisis. With orders collapsing at a rate not seen for over a decade, supply chains disrupted to a record degree and pessimism about the outlook hitting a new survey high, rising numbers of firms are culling payroll numbers,” Chris Williamson, chief business economist at IHS Markit, said in a statement.
9:33 a.m. ET: Stocks open lower after tepid tech quarterly results
Here were the main moves in markets, as of 9:33 a.m. ET:
S&P 500 (^GSPC): -49.96 points (-1.72%) to 2,862.47
Dow (^DJI): -380.37 points (-1.56%) to 23,965.35
Nasdaq (^IXIC): -171.22 points (-1.93%) to 8,720.13
Crude (CL=F): +$1.16 (+6.16%) to $20.00 a barrel
Gold (GC=F): -$6.90 (-0.41%) to $1,687.30 per ounce
10-year Treasury (^TNX): -0.7 bps to yield 0.618%
9:00 a.m. ET: Exxon Mobil reports first quarterly loss in decades, Chevron cuts capital expenditures again
Exxon Mobil reported its first quarterly loss in at least 32 years, with losses totaling $610 million for the first three months of the year versus income of $2.4 billion in the same quarter a year ago. However, the company departed from other major oil companies in sticking to its previously announced plans to cut capital expenditures by $10 billion to $23 billion for the year.
Chevron, on the other hand, cut its capital expenditures plans again following crude oil prices’ April slump. The company cut its capex plans buy $2 billion to $14 billion, after originally planning capex to come in at $20 billion for the year. These reductions are mostly going to hit Chevron’s shale production, with activity in both the Permian Basin and Canada getting slashed. Refining operations are also going to bear some of that cut.
While Chevron eked out a first-quarter profit, its results highlighted some of the demand destruction for downstream products that have resulted from the coronavirus pandemic. Jet fuel demand was down 75%, and diesel demand dropped 25%, the company said in a presentation Friday.
7:23 a.m. ET Friday: Stock futures fall
Here were the main moves in markets ahead of the opening bell, as of 7:24 a.m. ET:
S&P 500 futures (ES=F): down 59.5 points, or 2.05%, to 2,843.00
Dow futures (YM=F): down 461.00 points, or 1.90%, to 23,769.00
Nasdaq futures (NQ=F): down 229.00 points, or 2.55%, to 8,759.5
Crude (CL=F): -$0.03 (-0.16%) to $18.81 a barrel
Gold (GC=F): -$7.00 (-0.41%) to $1,687.20 per ounce
10-year Treasury (^TNX): -1.3 bps to yield 0.612%
6:02 p.m. ET Thursday: Stock futures open lower
Stock futures pointed to a lower open on Friday, as investors braced for more earnings and data that are all but certain to show how badly the coronavirus has stifled global growth.
Here were the main moves at the start of the overnight session for U.S. equity futures, as of 6:02 p.m. ET:
S&P 500 futures (ES=F): down 38 points, or 1.31%, to 2,864.5
Dow futures (YM=F): down 260 points, or 1.07%, to 23,970.00
Nasdaq futures (NQ=F): down 157.25 points, or 1.75%, to 8,831.25