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US Stocks Lower on Trump’s Threat to Impose New Tariffs on China; Amazon Plunge Weighs on Tech Shares

James Hyerczyk

The major U.S. stock indexes are expected to open lower on Friday as investors took a breather after the latest round of big tech earnings reports and after Wall Street posted its best month in decades. Grim U.S. economic data and President Donald Trump’s threat to impose new tariffs on China over the coronavirus crisis also weighed on prices.

In the cash market on Thursday, the benchmark S&P 500 Index settled at 2912.43, down 27.08 or -0.92%. The blue chip Dow Jones Industrial Average finished at 24345.72, down 288.14 or -1.17% and the technology-based NASDAQ Composite closed at 8889.25, down 25.16 or -0.28%.

Shortly before the cash market opening on Friday, Dow Jones Industrial Average futures indicated an opening drop of more than 450 points. S&P 500 and NASDAQ 100 futures also pointed to opening declines for the two indexes.

Major Stock Indexes Post Impressive Gains in April

The major U.S. stock indexes posted their biggest monthly surge in 30 years in April, with the S&P 500 Index gaining 12.7% while the Dow advanced 11.1%. It was the third-biggest monthly gain for the S&P 500 since World War II. The NASDAQ Composite closed 15.5% higher for April, logging in its biggest one-month gain since June 2000.

Key Earnings Data

Late Thursday, Apple reported quarterly earnings that topped analyst expectations, but its revenue growth remained flat on a year-over-year basis. Also, the company did not offer guidance for the quarter ending in June amid uncertainty over the coronavirus outbreak. The tech giant’s stock traded more than 2% lower in after-hours trading.

Amazon, another tech giant, saw its shares tumble 4.8% in after-hours trading after announcing plans to spend all its second-quarter profits on its coronavirus response. The e-commerce behemoth also posted a first-quarter profit that missed analyst expectations.

In April, Apple posted a 15.3% gain, while Amazon jumped nearly 27%.

Trump Threatens China

Global equity markets are being pressured by comments from President Donald Trump. On Thursday, Trump threatened new tariffs on Beijing as his administration crafts retaliatory measures over the origin of the pandemic which has swept through the U.S. and crippled its economy, Reuters said.

Trump triggered a wave of negative sentiment on Thursday when he said he was concerned about China’s role in the origin and spread of the novel coronavirus.

Trump also suggested that the long-awaited phase one trade deal signed between the two nations in January was now of secondary importance.

Meanwhile, two U.S. officials, speaking on condition of anonymity, said a range of options against China were under discussion, but cautioned that efforts were in the early stages.

Additionally, the Washington Post, citing two people with knowledge of internal discussions, reported on Thursday that some officials had discussed the idea of canceling some of the massive U.S. debt held by China as a way to strike at Beijing for perceived shortfalls in its candidness on the COVID-19 pandemic.

Trump’s top economic adviser denied the report. “The full faith and credit of U.S. debt obligations is sacrosanct. Period. Full stop,” White House economic adviser Larry Kudlow told Reuters.

This article was originally posted on FX Empire

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