Disappointing Earnings News Leads To Sell-Off On Wall Street

(RTTNews) - Stocks moved sharply lower over the course of the trading day on Friday, extending the pullback seen in the previous session. With the steep drop on the day, the major averages continued to give back ground after ending Wednesday's trading at their best closing levels in well over a month.

The major averages ended the day firmly in the red. The Dow tumbled 622.03 points or 2.6 percent to 23,723.69, the Nasdaq plunged 284.60 points or 3.2 percent to 8,604.95 and the S&P 500 slumped 81.72 points or 2.8 percent to 2,830.71.

For the week, the Dow and the S&P 500 both edged down by 0.2 percent, while the Nasdaq slipped by 0.3 percent.

The weakness on Wall Street partly reflected a negative reaction to earnings news from Amazon (AMZN), with the online retail giant plunging by 7.6 percent.

The steep drop by shares of Amazon came after the company reported weaker than expected first quarter earnings.

Shares of Honeywell (HON) also came under pressure after the conglomerate reported first quarter earnings that beat estimates but weaker than expected sales.

Apple (AAPL) also moved to the downside after the tech giant reported better than expected quarterly results but declined to provide guidance amid uncertainty about the coronavirus pandemic.

In U.S. economic news, the Institute for Supply Management released a report showing manufacturing activity continued to contract in the month of April.

The ISM said its purchasing managers index slumped to 41.5 in April from 49.1 in March, with a reading below 50 indicating a contraction in manufacturing activity.

The manufacturing index showed a notable decrease compared to the previous month but still came in above economist estimates for a reading of 36.9.

With the decline, the purchasing managers index dropped to its lowest level since hitting 39.9 in April of 2009.

Meanwhile, a separate report released by the Commerce Department showed an unexpected increase in construction spending in the month of March.

The Commerce Department said construction spending climbed by 0.9 percent to an annual rate of $1.361 trillion in March after tumbling by 2.5 percent to a revised $1.348 trillion in February.

The increase came as a surprise to economists, who had expected construction spending to plunge by 3.5 percent compared to the 1.3 percent slump originally reported for the previous month.

Sector News

Energy stocks turned in some of the market's worst performances on the day even as the price of crude oil for June delivery jumped $0.94 to $19.78 a barrel.

Reflecting the weakness in the energy sector, the Philadelphia Oil Service Index plunged by 8.9 percent and the NYSE Arca Oil Index plummeted by 6.5 percent.

Considerable weakness was also visible among computer hardware stocks, as reflected by the 5.4 percent nosedive by the NYSE Arca Computer Hardware Index.

Disk drive maker Western Digital (WDC) helped to lead the sector lower after reporting weaker than expected fiscal third quarter earnings.

Semiconductor, banking and housing stocks are also saw substantial weakness on the day, while gold stocks were among the few groups to buck the downtrend.

Other Markets

In overseas trading, Japanese and Australian stocks moved sharply lower on Friday, although most major markets in the Asia-Pacific region were closed for holidays. Japan's Nikkei 225 Index plunged by 2.8 percent, while Australia's S&P/ASX 200 Index plummeted by 5 percent.

U.K. stocks also showed a substantial move to the downside on the day, while the other European markets were closed on the day. The U.K.'s FTSE 100 Index tumbled by 2.3 percent.

In the bond market, treasuries turned in a lackluster performance before closing moderately lower. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, rose by 2 basis points to 0.642 percent.

Looking Ahead

Next week's trading may be impacted by reaction to the Labor Department's monthly jobs report as well as reports on the U.S. trade deficit, service sector activity, and private sector employment.