Dow tanks 900 points, like the S&P 500, Nasdaq posted the worst month since March 2020

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The Dow index plunged more than 900 points on Friday as Wall Street ended a gloomy April marked by investors’ wrists over rising interest rates, relentless inflation, corporate income and global turmoil.

The Dow Jones industrial average lost 939 points, or 2.8 percent, down 5.3 percent since the market closed on March 31. The S&P 500 index fell 3.6 percent and 9.1 percent for the month, and the Nasdaq, home of the technology stocks that carried the shock. of sales fell 4.2 per cent and 13.5 per cent for the month.

It was the S&P 500’s worst month since March 2020 and the loss of 13.8 percent since January 3 marked the worst start to the year since World War II, according to an analysis by investment strategist Sam Stovall at CFRA Research.

Investors are generally dizzy when the calendar turns to April; The month is known for hot markets and consumption. And a bad April has the potential to scare both economists and traders on the outlook for the rest of the year.

There are many macroeconomic signs that worse may be in store. Technology companies were hit hard, with shares of Amazon, Apple and Google’s parents Alphabet all falling 10 to 25 percent in April.

Amazon, whose founder Jeff Bezos owns The Washington Post, lost 14% of its stock price, $ 406 per share, on Friday alone.

The Federal Reserve appears to be raising lending rates to between 3 and 3.25 per cent, under contracts linked to its interest rate setting authority, with a view to averting more inflationary pressures.

Inflation in March jumped to 8.5 per cent, but the narrower core price index for personal consumption expenditure, which excludes more volatile food and energy costs, showed signs of declining.

Internationally, Russia on Thursday stopped the export of fossil fuels to Poland and Bulgaria, which put energy prices to pieces. Brent crude traded at $ 109 a barrel on Friday, and RBOB gas, the benchmark index for US gasoline, sold for $ 3.46 a gallon.

Chinese health authorities have also imposed near-total shutdowns in Beijing and Shanghai, the country’s two largest cities, to combat rising covid-19 cases, throwing already stressed supply chains into disarray.

In total, the economy shrank by 1.4 per cent during the three months of 2022, which raised fears of a recession, defined as two consecutive quarters of economic downturn.

“Markets are finally facing the economic and geopolitical realities: not everything is good,” said George Ball, chairman of the Houston-based financial services firm Sanders Morris Harris.

“Markets are concerned that the Federal Reserve is raising interest rates to a decline, thus making a major, recovered policy error,” said Jamie Cox, managing partner of Harris Financial Group. “In other words, events around the world are slowing economic growth, especially in Europe and Asia, without clear signs of giving up. As the negative GDP print yesterday suggests, the fallout here at home is as well. So instead of just repurchasing the value of cash flows at the expected exchange rate, the markets are taking recession into account. “

But economists cheered on other signs, even as investors sought safe havens. Earnings in the companies have generally been positive. Meta, the parent company of Facebook and Instagram, reported user growth after sounding the alarm in previous quarters that it lost younger users to launch the video sharing platform TikTok.

Twitter’s shares rose 25.7 percent after mogul Elon Musk secured financing to buy the company. However, his electric car maker, Tesla, lost 20 percent, forcing him to sell a further $ 8.4 billion in shares to secure liquidity for the $ 44 billion Twitter acquisition.

Service and natural resource companies excelled in April. Proctor & Gamble received almost $ 8 per share, or 5.2 percent. Health insurance giant Humana took better than $ 9 per share, or 2 percent. Tyson Foods, the Arkansas-based poultry producer, and Marathon Petroleum added 4 percent and 2.4 percent, respectively.

“The numbers for production and service look good,” said Louis Navellier, who heads an investment firm in Reno, Nevada. “Consumption is still healthy. The only disturbance is everything we import from China due to the shutdowns in Shanghai.”

On the consumer side, personal income grew by 0.5 per cent in March, federal data showed, which led to a larger than expected increase in consumption expenditure. Walmart was a beneficiary, with shares up just over 3 percent in April.

The Fed’s forthcoming rate hikes, although worrying for larger investors, economists are optimistic that labor costs and inflation may soon flatten out.

“Consumers are the backbone of the economy, and their spending continues at a normal pace despite everything the world has thrown at them in the first quarter of this year, from war in Europe to a stock market crash,” Chris Rupkey, chief economist at FWD Bonds. Friday note. “There is nothing going wrong with the economy with the consumer still cheering on the road to prosperity. No recession on the horizon yet.”

Then Friday’s sale happened. Rupkey revised his assessment in a later note.

“The stock market has collapsed, the most leading of leading indicators showing that the economy is going to crash,” he said. “Look up below.”

Kate Rabinowitz and Doug MacMillan contributed to this report.

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