The old saying “sell in May and go away” comes to mind as the stock market kicked off the month with all three major U.S. indexes tanking 2.6% and worse, plus more in today’s Closing Bell on Money & Markets.
Many factors soured the mood on Wall Street to start off the month of May, but arguably the biggest hit came from U.S. President Donald Trump’s threat to hit China with more tariffs, restarting a trade war that sowed uncertainty throughout financial markets last year.
Trump’s administration is crafting a retaliation for the coronavirus outbreak that started in Wuhan, China, late last year only months after signing phase one of a new trade deal that seemed like a truce of sorts between the world’s two largest economies.
That was before the pandemic rocked economies around the world.
And it couldn’t be a worse time to revive a trade war as the global economy tries to rev up its engines and restart after massive lockdowns during the novel coronavirus pandemic.
“The last thing you want is (tariff) retaliation when the world economy looks like it’s headed into depression. The coronavirus has put everything out of whack, but the economy was already weakening due to the trade war,” Peter Cardillo, chief market economist at Spartan Capital Securities, said in a Reuters interview.
A disappointing earnings report from Amazon, which was part of a mixed bag of earnings overall, drove stocks lower as well.
Amazon warned it could face its first quarterly loss in five years as it plans to spend $4 billion on coronavirus-related expenses in Q2. Shares of the tech giant fell 7.6%.