Dow futures were pointing to an over 450-point decline at Friday's open after President Donald Trump threatened new tariffs on China over the coronavirus outbreak, which originated in the Chinese city of Wuhan late last year. The negative tone in the market on the first day of May comes after the Dow Jones Industrial Average broke its three-month losing streak and finished April with its best monthly gain since January 1987.
To put that advance in context, the Dow plunged 38% from its Feb. 12 record high to its pandemic low on March 23. Since then, blue chips gained more than 30%. However, the new month brings speculation about whether the "sell in May, go away" stock strategy will materialize this year. Historically, investing in the Dow between Nov. 1 and April 30 each year and switching into fixed income for the other six months has been a winning strategy.
As the White House considers retaliatory measures against China, Trump said Thursday, without offering any evidence, that he has a high degree of confidence that the coronavirus came from the Wuhan Institute of Virology. U.S. intelligence officials said they have concluded that the virus, which causes Covid-19, was "not manmade or genetically modified." But they are still investigating whether the outbreak was sparked by an accident at the Wuhan lab or by contact with infected bats. Last week, the World Health Organization said that evidence supports the bat theory. Globally, the virus has infected nearly 3.3 million people, with nearly one-third of those cases in the United States. Worldwide, 233,791 have died, including 63,019 in the United States.
Chevron warned on Friday that results will remain depressed as long as oil prices remain low, and that it was further cutting its 2020 capital spending plan. Exxon Mobil also issued quarterly results before the stock market opened, announcing a $610 million loss in the first quarter due to writedowns tied to falling oil prices.
After the close of trading on Thursday, tech titans Amazon and Apple released their quarterly results. Amazon, which has benefited from surging e-commerce demand and cloud reliance during the pandemic, missed estimates on first-quarter earnings but beat on revenue. Amazon said it plans to spend all of its estimated $4 billion in second-quarter profit on responding to the coronavirus crisis. Apple reported better-than-expected fiscal second-quarter earnings and revenue. The iPhone maker increased its quarterly dividend and stock buyback program.
Boeing has raised a massive $25 billion in a bond offering, the ailing aircraft maker's biggest debt sale ever. As a result, Boeing said Thursday it won't be seeking federal coronavirus aid as it faces what's expected to be a multiyear slump in air travel because of the pandemic. The seven Boeing bonds that were sold range in maturities from three years to 40 years. Boeing has scrambled to shore up liquidity and recently drew down a nearly $14 billion loan. Before the outbreak, Boeing was already dealing with an over yearlong grounding of its 737 Max fleet after two of those jets were involved in crashes that killed a total of 346 people.
Warren Buffett has yet to comment on the coronavirus-driven stock market rout and economic nosedive. But that will change on Saturday, when the "Oracle of Omaha" takes the stage at Berkshire Hathaway's annual shareholders' meeting. For the first time in decades, Buffett's longtime investment partner Charlie Munger won't be on stage. Instead, Greg Abel, vice chairman of Berkshire's noninsurance operations, will be answering questions alongside Buffett on Saturday. Tens of thousands of the Buffett faithful normally flock to Nebraska for the meeting. But this year, only Buffett and Abel will there in person. Everyone else will have the option of streaming it via Yahoo Finance.