The Dow Jones Industrial Average fell more than 900 points on Friday after another sharp sell-off driven by technology stocks added to Wall Street’s losses in April, leaving the S&P 500 with its biggest monthly drop since the pandemic.
Amazon’s sharp decline weighed on the market after internet retail giant reported its first loss since 2015. The decline cut more than $ 200 billion from Amazon’s market value.
The S&P 500 fell 3.6% to end April with a loss of 8.8%, its worst monthly decline since March 2020. The Dow fell 2.8%.
The composite Nasdaq, heavily weighed in technology stocks, suffered the heaviest damage this month, ending April with a loss of 13.3%, its biggest monthly drop since the 2008 financial crisis.
The main indexes shifted between declines and rises throughout the week as the last round of corporate profits hit the market. Investors are reviewing a particularly heavy batch of financial results from large technology companies, industrial companies and retailers.
But some disappointing results or prospects from Apple, the parent company of Google and Amazon, helped boost sales this week.
“When you start hearing from companies that say demand may have fallen, fears of a deeper economic slowdown are gaining momentum, and that’s where we are,” said Quincy Crosby, chief equity strategist for LPL Financial.
Traders also continue to worry about the heavy drug the Federal Reserve is using to fight inflation: higher interest rates. The central bank is expected to announce another round of interest rate hikes next week, a move that will further increase the cost of loans for people who buy cars, use credit cards and take out mortgages to buy homes.
“Growing pressure on spending and uncertain prospects from the biggest tech names woke up investors over the weekend and investors are unlikely to feel comfortable anytime soon as the Fed is expected to provide a 50-basis increase, along with a hawk message next week, “said Charlie Ripley, senior investment strategist at Allianz Investment Management.
The S&P 500 fell 155.57 points to 4,131.93 on Friday. The reference index has already decreased by 13.3% for the year. The Dow fell 939.18 points to 32,977.21 points. The Nasdaq fell 536.89 points to 12,334.64 points. So far this year it has decreased by 21.2%.
Shares of smaller companies also had a hard day. Russell 2000 fell 53.84 points, or 2.8%, to 1,864.10.
High technology keeps the market lower throughout the month as retailers avoid the high-end sector. Technical technology has made huge profits during the pandemic and is now beginning to look overvalued, especially with interest rates rising sharply as the Fed intensifies its fight against inflation.
Internet retail giant Amazon fell 14 percent, one of the biggest declines in the S&P 500, a day after reporting a rare quarterly loss and giving investors a disappointing earnings forecast. The weak update from Amazon comes as Wall Street worries about a potential slowdown in consumer spending, along with rising inflation.
The prices of everything from food to gas are rising as the economy recovers from the pandemic and there is a big gap between higher demand and lagging supplies. Russia’s invasion of Ukraine has only heightened concerns about inflation as it raises the prices of oil, natural gas, wheat and corn.
The Commerce Department said on Friday that the inflation indicator, closely monitored by the Federal Reserve, rose 6.6 percent in March from a year ago, the highest 12-month jump in four decades and further evidence that the jump prices are putting pressure on household budgets and the health of the economy.
The latest report on rising inflation in the United States follows a report by the statistical agency Eurostat, which shows that inflation reached a record high in April of 7.5% for the 19 countries that use the euro.
Bond yields rose after hot inflation. Yields on 10-year bonds rose to 2.92% from 2.85%.
Continued rising inflation has prompted central banks to raise interest rates to mitigate the impact on business and consumers.
Much of Wall Street’s concern in April has focused on how quickly the Fed will raise its key interest rate and whether an aggressive series of increases will hamper economic growth. The Fed chairman said the central bank could raise short-term interest rates by doubling the usual amount for upcoming meetings starting next week. It has already raised its base overnight interest rate once, the first such increase since 2018, and Wall Street expects several large increases in the coming months.
Investors spent most of April transferring money from large technology companies whose shares benefit from low interest rates to areas considered less risky. The consumer sector of the S&P 500, which includes many manufacturers of household and personal goods, was the only sector in the benchmark to make a profit in April. Other sectors for safe play, such as utilities, performed better than the wider market, while technology and communications stocks were among the biggest losers.
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