U.S. Stocks Erase Weekly Gain on Profit Warnings: Markets Wrap

(Bloomberg) -- U.S. stocks dropped as investors began May pondering profit warnings tied to the coronavirus and a ratcheting up of tension with China. The dollar rose as a risk-off mood prevailed.

The S&P 500 Index fell almost 3%, leaving it a tad lower for the week, after sobering comments from Amazon.com Inc. and Apple Inc. about the pandemic's impact. Exxon Mobil Corp. slumped after posting its first quarterly loss in at least 32 years. The dollar posted its first increase since last week.

Equities also retreated in the U.K., one of the few open markets in Europe as other countries celebrated May Day, and the pound gave back some of this week's gains as Prime Minister Boris Johnson pledged a “comprehensive plan” to lift the country's lockdown, with details due next week.

While the S&P 500 posted its best month since 1987 in April -- spurred by a slowdown in coronavirus infections and $8 trillion in promised stimulus initiatives globally -- earnings reports and economic data are serving a reminder of lasting pain. Amazon warned of a possible second-quarter loss, while Apple omitted an earnings forecast for the first time in more than a decade. Federal Reserve Bank of Dallas President Robert Kaplan warned of a “severe” contraction from the effects of coronavirus.

“Earnings continued to be a minefield,” said Bryce Doty, portfolio manager at Sit Investment Associates Inc. “You don't really know what is going to happen because there is so little clarity.”

The advance in the dollar followed U.S. President Donald Trump reviving an attack on China, speculating it could have spread the coronavirus and threatening trade tariffs. Trump is exploring blocking a government retirement fund from investing in Chinese equities considered a national security risk, a person familiar with the internal deliberations said.

Elsewhere, West Texas oil posted its first weekly gain in about a month as global production cuts began to take effect.

Stocks slumped in Tokyo and Sydney. Most Asian markets didn't trade.

These are the main moves in markets:

Stocks

• The S&P 500 Index fell 2.8% at the close of trade in New York.
• The Nasdaq Composite Index declined 3.2%.
• The U.K.'s FTSE 100 Index dropped 2.3%.
• The MSCI All-Country World Index fell 2.4%.

Currencies

• The Bloomberg Dollar Spot Index rose 0.4%.
• The euro gained 0.2% to $1.0979.
• The British pound declined 0.7% to $1.2505.
• The Japanese yen strengthened 0.3% to 106.82 per dollar.

Bonds

• The yield on 10-year Treasuries slipped one basis point to 0.63%.
• Britain's 10-year yield rose two basis points to 0.24%.

Commodities

• West Texas Intermediate crude climbed 4.9% to $19.77 a barrel.
• Gold rose 0.8% to $1,699.98 an ounce.

©2020 Bloomberg L.P.