Stock Market News for May 4, 2020

Benchmarks closed in the red on Friday as investors got disappointed with earnings from big tech companies. Additionally, President Trump’s threat to impose additional tariffs on China in retaliation for its handling over coronavirus, dampened investors’ sentiment.

The Dow Jones Industrial Average (DJI) fell 622.03 points, or 2.6%, to close at 23,723.69and the S&P 500 slid 81.72 points, or 2.8%to close at of 2,830.71. While, the Nasdaq Composite Index closed at 8,604.95, shedding284.60 points, or 3.2%. The fear-gauge CBOE Volatility Index (VIX) increased3.5%, to close at 37.19. Declining issues outnumbered advancing ones for 5.23-to-1 ratio on the NYSE and a 4.40-to-1 ratio on the Nasdaq favored decliners.

How Did the Benchmarks Perform?

All the 11 sectors of the S&P 500 closed in the red. In spite of several companies reporting positive earnings the energy sectors slumped as coronavirus-led lockdowns damages demand for crude oil. The energy index fell 5.8% as oil producers like Exxon Mobil Corporation XOM and Chevron Corporation CVX said they are halting U.S. shale oil production which is hurt by falling oil prices.

Overall, the S&P index recorded no new 52-week highs and two new lows. Meanwhile, Nasdaq recorded17new highs and 12 new lows.

Big Tech’s Earnings Disappoint Investors

Tech-giants Apple Inc. AAPL and Amazon.com, Inc. AMZN reported earnings after market close on Apr 30. The company’s earnings and outlook dampened investors’ sentiments.

Shares of Apple slided 1.6% on Friday, after the company reported second-quarter fiscal 2020 earnings of $2.55 per share that beat the Zacks Consensus Estimate by 22% and increased 3.7% year over year. Product sales decreased 3.4% year over year to $44.97 billion, while services revenues grew 16.6% from the year-ago quarter to $13.35 billion, a record in the company’s history. The decline in sales is due to coronavirus-related lockdowns and store closures during the last three weeks of the reported quarter. (Read More)

Shares of Amazon.com plunged 7.6% on Friday, after the company reported first-quarter 2020 earnings of $5.01 per share, missing the Zacks Consensus Estimate by 21.2%. However, net sales of $75.45 billion comfortably surpassed the Zacks Consensus Estimate of $74.36 billion and exceeded management’s guided range of $69 billion to $73 billion.

The top line was boosted by solid customer demand, strong Amazon Web Services (AWS) momentum, expanding smart devices portfolio and strengthening content portfolio on Prime Video. But, sale of non-essential items and luxury commodities during the reported quarter remained a concern due to the coronavirus pandemic. (Read More)

Amazon.com and Apple both carrya Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Trump to Consider Additional Tariffs on China

On Friday, President Donald Trump indicated that he may consider imposing import tariffs on China due to miss handling of the coronavirus pandemic. In fact, U.S officials are exploring options to punish China and that may include punitive import tariffs.

The S&P 500 technology index shed 2.3%, which was led by declines in trade-sensitive chip stocks. The Philadelphia Semiconductor index fell 5.1%. These stocks are highly trade-sensitive and depend on China for raw materials and finished goods.

Economic Data

On May 1, the Institute for Supply Management’s (ISM) reported that manufacturing index came in at 41.5 for April. The U.S. manufacturing activity plunged to an 11-year low in April hinting that the economy was sinking deeper into recession. However, the drop is lower than the consensus estimate of 36.4.

Weekly RoundUp

Earlier in the week the major indexes post their best April in year, however, Thursday and Friday’s consecutive losses added to the losses on the week. The Dow and S&P lost 0.2% and the Nasdaq ended the week 0.3% lower.

Along with the steep rise in COVID-19 cases, the rise in unemployment due to lockdowns has also dampened the economy. The U.S. initial jobless claims totaled 3.84 million for the week ending Apr 25 and personal spending tumbled 7.5% in March.

Stocks that Made Headline

Lazard Q1 Earnings Miss on Lower Revenues, Costs Down

Following the first-quarter 2020 results, shares of Lazard LAZ have declined 8.96%. The company reported first-quarter 2020 adjusted earnings of 58 cents per share, missing the Zacks Consensus Estimate of 62 cents. (Read More)

Cullen/Frost Q1 Earnings Disappoint, Provisions Escalate

Following the first-quarter 2020 results, shares of Cullen/Frost Bankers, Inc. CFR have declined 7.61%. The company reported earnings per share of 75 cents, missing the Zacks Consensus Estimate of 91 cents. (Read More)

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Exxon Mobil Corporation (XOM) : Free Stock Analysis Report
 
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