US open: Stocks head south following earnings and tariff threats

US stocks opened lower on Friday as Amazon and Apple shares tumbled following their first-quarter updates and the President seemingly decided to reignite America's trade war with China with some alarming claims regarding the Covid-19 pandemic's origin.

As of 1530 BST, the Dow Jones Industrial Average was down 1.88% at 23,887.55, while the S&P 500 was 2.03% weaker at 2,853.32 and the Nasdaq Composite started out the session 2.04% softer at 8,708.33.

The Dow opened 458.17 points lower on Friday, deepening losses recorded in the previous session.

Apple shares were down at the open, despite posting quarterly earnings that topped expectations, after revealing that year-on-year revenue growth had been stagnant and choosing not to offer any guidance for the year ahead, while fellow tech giant Amazon was also under pressure after vowing to spend all its second-quarter profits on its Covid-19 response and posting a first-quarter profit that missed Wall Street estimates.

Also weighing on sentiment, Donald Trump took some time out of his Covid-19 response efforts to threaten China with more tariffs. Trump claimed to have evidence that the coronavirus started in a Chinese lab, likely fanning the flames of a trade spat between the world's two largest economies that had somewhat remained in the back of investors minds of late.

With stocks opening sharply lower, Friday's session looked set to snap a recent market comeback - driven by hopes that the US economy would reopen sooner than expected after pharma group Gilead Sciences said a study of its remdesivir drug conducted by the National Institute of Allergy and Infectious Diseases had met its primary endpoint.

Oanda's Craig Erlam said: "It's been a very strange week in all honest[y]. We rallied early on ahead of some huge earnings results and central bank meetings, as investors swerved the kind of caution that usually accompanies such major announcements. We then got a legitimate boost from Gilead and the Remdesivir trial, along with decent corporate results from Microsoft and Facebook. And we've finished the week weighing up the prospect of US tariffs on China. Weird."

On the macro front, US manufacturing contracted at an accelerated pace in April, with activity sinking to an 11-year low as strict measures to slow the spread of Covid-19 weighed on demand and fractured supply chains.

IHS Markit's final US manufacturing purchasing managers' index dropped to a reading of 36.1 last month - its lowest reading since March 2009.

Elsewhere, the Institute for Supply Manufacturing's PMI fell to 41.5, better than estimates of 35 but a big drop from March's reading of 49.1.

Lastly, US construction spending unexpectedly rose in March, according to the Commerce Department. Construction spending increased 0.9% in March but data for February was revised down to show a decline of 2.5% instead of the 1.3% initially reported.