The defeat continued after the closing bell, after the results of Alphabet and Microsoft were disappointed.
By Vildana Hajrich and Isabel Lee Bloomberg
Published April 26, 2022 April 26, 2022
US stocks fell to their lowest level in six weeks as doubts emerged that corporate profits could withstand the Federal Reserve, which is stepping up its battle to curb inflation.
The defeat continued after the cash market closed, with the results of Alphabet Inc., Texas Instruments Inc. and Microsoft Corp. they were disappointed. The largest ETF, which tracks the Nasdaq 100, sank another 1% after the technology index fell nearly 4% to its lowest level in 11 months. Alphabet lost 5.8% and Microsoft fell 1.2% at 4:10 p.m. in New York.
The S&P 500 lost 2.8% during regular trading after General Electric Co. fell after its profit forecast was disappointing and Tesla Inc. fell after Elon Musk agreed to use his fortune to buy Twitter Inc. Treasuries, dollar and oil prices rose, while European gas rose amid reports of a cessation of inflows.
The prospect of slower economic expansion along with sustained inflation is leading to a febrile mood in the markets. The set of risks includes the pandemic, supply chain disruptions, the Fed’s tightening and Russia’s heavy war in Ukraine. Demand for portfolio buffers in the United States is evident in the highest relative price of put loss contracts in two years.
“There is no doubt that economic growth is in trouble and that the track for central banks to manage soft landings is getting smaller as wages and inflation move higher,” said Lauren Goodwin, an economist and portfolio strategist at New York Life. Investments. “The big question about asset allocation is not whether inflation will be high. This is a given. Instead, it is whether growth can continue. “
Corporate profits in the United States provide some consolation for bullish stocks – nearly 80% of companies exceeded earnings expectations, including GE, United Parcel Service Inc. and Pepsico Inc. However, disappointing forecasts, including those of JetBlue Airways Corp., weigh on the shares. The results from Microsoft Corp., Google’s parent Alphabet Inc. and Visa Inc. yet to come.
China Boost
Shares in Europe followed those in the US lower, erasing gains earlier in the session from positive corporate results and rising sentiment from China’s promise to support Covid’s affected economy.
Most of Beijing is being tested for the virus, which dispels fears of an unprecedented blockade that could hamper global growth. However, Dennis DeBuscher, founder of 22V Research, said concerns about inflationary pressures may be exaggerated.
“There is no increasing pressure in the supply chain from other important countries in the supply chain, as in 2021,” he said. “In general, there is a softer consumer demand, the cost of services is recovering (moderate costs of goods) and the US dollar is moving higher.”
The Asia-Pacific stock index rose for the first time in four sessions amid a 3% jump in technology stocks in Hong Kong. Stock markets in mainland China fell, but avoided the fall seen on Monday. The yen rose amid short coverage.
This week’s events to watch:
- Technology gains include Alphabet, Meta Platforms, Amazon, Apple
- EIA Oil Inventory Report, Wednesday
- CPI in Australia, Wednesday
- Decision on the monetary policy of the Bank of Japan, Thursday
- US GDP for the first quarter, weekly unemployment applications, Thursday
- The ECB released its economic bulletin on Thursday
Some of the main market movements:
Stocks
- The S&P 500 fell 2.8% at 4:01 p.m. New York
- Nasdaq 100 fell 3.9%
- Dow Jones Industrial Average fell 2.4%
- The MSCI World Index fell 2.1%
Currencies
- Bloomberg Dollar Spot Index Increases 0.5%
- The euro fell 0.7% to $ 1.0642
- The British pound fell 1.2% to $ 1.2585
- The Japanese yen rose 0.5% to 127.45 per dollar
Bonds
- 10-year bond yields down seven basis points to 2.75%
- Germany’s 10-year yield fell two basis points to 0.81%
- Britain’s 10-year yield fell four basis points to 1.80%
Goods
- West Texas Intermediate crude rose 3.7 percent to $ 102.20 a barrel
- Gold futures rose 0.3% to $ 1902.30 an ounce
– With the assistance of Cecil Gutscher, Robert Brand and Joanna Osinger.
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