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COVID-19

Market reactions to COVID-19: Stocks end the week in decline

Janet Nguyen May 1, 2020
A view of Amazon workers at Amazon's Staten Island warehouse holding a strike in March, calling for the facility be shut down and cleaned after one staffer tested positive for the coronavirus. Employees are also taking part in a nationwide strike this Friday, in protest of better working conditions. ANGELA WEISS/AFP via Getty Images
COVID-19

Market reactions to COVID-19: Stocks end the week in decline

Janet Nguyen May 1, 2020
A view of Amazon workers at Amazon's Staten Island warehouse holding a strike in March, calling for the facility be shut down and cleaned after one staffer tested positive for the coronavirus. Employees are also taking part in a nationwide strike this Friday, in protest of better working conditions. ANGELA WEISS/AFP via Getty Images

This post was updated May 1 at 8:02 p.m. Eastern time.

The major stock indexes declined on Friday after major tech companies reported how they’ve been affected by the COVID-19 pandemic. 

The Dow Jones Industrial Average declined by more than 622 points, the S&P 500 by more than 81 points and the Nasdaq composite index by more than 284 points. 

Apple failed to provide financial guidance to investors for the first time since 2003. “As COVID-19 started impacting China, iPhone supply was temporarily affected, as well as demand for our products within China. This caused us to withdraw our revenue guidance in February,” Apple CEO Tim Cook explained during a conference call on Thursday. 

Amazon also revealed how the pandemic has been affecting the company. While the tech giant’s revenue grew 26% during the first three months of the year, CEO Jeff Bezos said the company will spend the entirety of its $4 billion profit on COVID-related expenses between April and June. 

“If you’re a shareowner in Amazon, you may want to take a seat, because we’re not thinking small,” Bezos said

Although some of this would go toward paying for personal protective equipment for Amazon’s warehouse workforce, Amazon shares declined more than 7% after the news.

The market has been seesawing this week amid the release of earnings reports, unemployment data and consumer confidence numbers, along with news from the Federal Reserve and developments surrounding a drug that could treat COVID-19. 

Stocks rose on Wednesday after a study on an experimental drug from Gilead Sciences showed that it reduced the time it takes patients to recover by 31%. The Federal Reserve also announced that it plans to keep its interest rate target between 0% and 0.25%, a range the central bank set in March. “We can do what we can do, and we will do it to the absolute limit of those powers,” Fed Chair Jerome Powell said. 

There are now more than 3.1 million confirmed cases of COVID-19 worldwide and more than 224,300 people have died, according to the World Health Organization. In the United States and its territories, the number of confirmed cases has exceeded 1.1 million, while the death toll has risen to more than 64,800.

Here’s a look at how the major stock indexes have been reacting to the news since the beginning of the year.

COVID-19 Economy FAQs

What do I need to know about tax season this year?

Glad you asked! We have a whole separate FAQ section on that. Some quick hits: The deadline has been extended from April 15 to May 17 for individuals. Also, millions of people received unemployment benefits in 2020 — up to $10,200 of which will now be tax-free for those with an adjusted gross income of less than $150,000. And, for those who filed before the American Rescue Plan passed, simply put, you do not need to file an amended return at the moment. Find answers to the rest of your questions here.

How long will it be until the economy is back to normal?

It feels like things are getting better, more and more people getting vaccinated, more businesses opening, but we’re not entirely out of the woods. To illustrate: two recent pieces of news from the Centers for Disease Control. Item 1: The CDC is extending its tenant eviction moratorium to June 30. Item 2: The cruise industry didn’t get what it wanted — restrictions on sailing from U.S. ports will stay in place until November. Very different issues with different stakes, but both point to the fact that the CDC thinks we still have a ways to go before the pandemic is over, according to Dr. Philip Landrigan, who used to work at the CDC and now teaches at Boston College.

How are those COVID relief payments affecting consumers?

Payments started going out within days of President Joe Biden signing the American Rescue Plan, and that’s been a big shot in the arm for consumers, said John Leer at Morning Consult, which polls Americans every day. “Consumer confidence is really on a tear. They are growing more confident at a faster rate than they have following the prior two stimulus packages.” Leer said this time around the checks are bigger and they’re getting out faster. Now, rising confidence is likely to spark more consumer spending. But Lisa Rowan at Forbes Advisor said it’s not clear how much or how fast.

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