The Dow Jones Industrial Average plunged more than 900 points on Friday as another sharp sell-off led by tech stocks took Wall Street losses in April, leaving the S&P 500 with its biggest monthly slide since the pandemic began.
Amazon’s sharp decline weighed on the market after the online retail giant posted its first loss since 2015. The drop led to a loss of more than $200 billion in Amazon’s market value.
The benchmark S&P 500 index fell 3.6% and ended April with a loss of 8.8%, its worst monthly drop since March 2020. The Dow fell 2.8%.
The Nasdaq Composite, heavily weighted by technology stocks, bore the brunt of the damage this month, ending April with a 13.3% loss, its biggest monthly drop since the 2008 financial crisis.
Major indices have switched between slumps and rallies throughout the week as the latest round of corporate earnings hit the active market. Investors were reviewing a raft of financial results for major technology companies, industrial companies and retailers.
But some disappointing results or expectations from Apple, the parent company of Google and Amazon, helped support the sell-off this week.
“When you start hearing from companies saying that demand might be dropping, concerns about a deeper slowdown in the economy are gaining traction, and that’s where we are now,” said Quincy Crosby, chief equity strategist at LPL Financial.
Traders also continue to worry about the harsh remedy the Federal Reserve is using in its fight against inflation: higher interest rates. The central bank is expected to announce another round of interest rate hikes next week, a move that will increase borrowing costs across the board for people who buy cars, use credit cards and take out home loans.
“Increasing cost pressures and uncertain expectations from the biggest tech names left investors jittery over the weekend, and investors are unlikely to get comfortable anytime soon, as the Fed is widely expected to deliver a 50 basis point rise alongside An upbeat message next week said Charlie Ripley, chief investment analyst at Allianz Investment Management.
The S&P 500 fell 155.57 points to 4,131.93 on Friday. The benchmark is now down 13.3% for the year. The Dow Jones index fell 939.18 points to 3,2977.21 points. The Nasdaq fell 536.89 points to 12,334.64. It’s down 21.2% so far this year.
It was also a rough day for small-cap stocks. The Russell 2000 Index fell 53.84 points, or 2.8%, to 1,864.10 points.
Big Tech is driving the market lower all month long as traders avoid the higher aviation segment. Technology has posted massive gains during the pandemic and is now starting to look overdone, especially as interest rates prepare for a sharp rise as the Federal Reserve ramps up its fight against inflation.
Online retail giant Amazon It fell 14 percent, one of the biggest losers in the S&P 500, a day after reporting a rare quarterly loss and giving investors a disappointing revenue outlook. The weak update from Amazon comes amid Wall Street fears of a possible slowdown in consumer spending as inflation rises.
Prices for everything from food to gas have risen as the economy has recovered from the pandemic and there has been a major disconnect between rising demand and lagging supplies. Russia’s invasion of Ukraine It only increased inflation fears because it increased the prices of oil, natural gas, wheat and corn.
The Commerce Department reported Friday that the inflation gauge, which the Federal Reserve follows closely, rose 6.6% in March Compared to last year, the highest jump in 12 months in four decades and other evidence that higher prices are putting pressure on household budgets and the health of the economy.
The latest report on rising inflation in the US comes on the heels of a report by statistics agency Eurostat that showed inflation hit its highest level in April at 7.5%. for the nineteen countries that use the euro.
Bond yields rose after hot inflation readings. The yield on the 10-year Treasury rose to 2.92% from 2.85%.
Constantly increasing inflation has prompted central banks to raise interest rates in order to mitigate the impact on businesses and consumers.
Much of the anxiety on Wall Street in April centered around how quickly the Federal Reserve would raise its benchmark interest rate and whether a series of violent increases would stymie economic growth. The Fed chair indicated that the central bank may raise short-term interest rates by twice the usual amount in upcoming meetings, starting next week. It has already raised its key rate overnight once, the first such increase since 2018, and Wall Street expects several significant increases over the coming months.
Investors spent most of April shifting money away from big tech companies, whose stock values are benefiting from low interest rates, to areas deemed less risky. The S&P 500 core consumer goods sector, which includes several makers of household and personal goods, was the only sector in the benchmark index to gain in April. Other safe-play sectors, such as utilities, have held up better than the broader market, while technology and telecoms stocks are among the biggest losers.