Technology stocks fall again, Nasdaq has the worst month since 2008

The Dow Jones Industrial Average fell more than 900 points on Friday, when another strong sale of technology stocks increased Wall Street’s losses in April, leaving the S&P 500 with its biggest monthly avalanche since the start of the pandemic.

A sharp fall in Amazon weighed on the market after the online store giant posted its first loss since 2015. The decline hit more than $ 200 billion of Amazon’s market value.

The benchmark index S&P 500 fell 3.6% and ended April with a loss of 8.8%, the worst monthly fall since March 2020. The Dow index fell 2.8%.

The Nasdaq composite, heavily weighted by technology stocks, carried the bulk of the damage this month, ending April with a loss of 13.3%, the largest monthly decline since the 2008 financial crisis.

Major indices shifted between downturns and upswings throughout the week as the latest round of corporate income hit the current market. Investors have reviewed a particularly heavy group of financial results from large technology companies, industrial companies and dealers.

But some disappointing results or prospects from Apple, Google’s parent company and Amazon helped drive sales this week.

“When you start hearing from companies that say maybe demand is down, the concern about a deeper downturn in the economy increases, and that’s where we are,” said Quincy Krosby, chief strategist for LPL Financial.

Traders also continue to worry about the tough drug the Federal Reserve is using in its fight against inflation: higher interest rates. The central bank is expected to announce a new round of interest rate increases next week, a move that will increase borrowing costs across the board further for people who buy cars, use credit cards and take out mortgages to buy homes.

“Increasing cost pressures and uncertain prospects from the biggest technology names have caused investors to revolt over the weekend, and investors are unlikely to be comfortable with the near term, with the Fed generally expected to deliver a 50 basis point increase along with a hawkish message next week “, said Charlie Ripley, senior investment strategist for Allianz Investment Management.

The S&P 500 fell 155.57 points to 4,131.93 on Friday. The benchmark index is now down 13.3% for the year. The Dow fell 939.18 points to 32,977.21. Nasdaq fell 536.89 points to 12,334.64. It is down 21.2% so far this year.

Smaller corporate stocks also had a tough day. Russell 2000 fell 53.84 points, or 2.8%, to 1,864.10.

Big Tech has led the market lower throughout the month as traders avoid the high-flying sector. Technology had yielded huge gains during the pandemic and is now beginning to look overpriced, especially with interest rates set to rise sharply as the Fed escalates the fight against inflation.

Online shopping giant Amazon fell 14%, one of the biggest declines in the S&P 500, a day after they reported a rare quarterly loss and gave investors a disappointing earnings forecast. The weak update from Amazon comes as Wall Street worries about a potential decline in consumption along with rising inflation.

Prices for everything from food to gas have risen as the economy recovers from the pandemic, and there has been a strong link between higher demand and lagging supplies. Russia’s invasion of Ukraine has only raised concerns about inflation as it drives up price increases for oil, natural gas, wheat and maize.

The Ministry of Commerce reported on Friday that an inflation meter followed by the Federal Reserve rose by 6.6% in March compared to a year ago, the highest 12-month jump in four decades and further evidence that high prices are pushing household budgets and the health of the economy.

The latest report on rising US inflation follows a report from the statistical agency Eurostat which shows that inflation reached a record high in April of 7.5% for the 19 countries using the euro.

Bond yields rose after the warm measurements of inflation. The interest rate on the 10-year Treasury rose to 2.92% from 2.85%.

Sustained rising inflation has led central banks to raise interest rates to curb the impact on businesses and consumers.

Much of the anxiety on Wall Street in April has centered on how quickly the Fed will raise its reference rate and whether an aggressive series of increases will slow economic growth. The chairman of the Fed’s board has indicated that the central bank can raise short-term interest rates by twice the usual amount at upcoming meetings, from next week. It has already raised its overnight policy rate once, the first such increase since 2018, and Wall Street expects several major increases in the coming months.

Investors spent much of April moving money away from Big Tech companies, whose stock values ​​benefit from low interest rates, to areas considered less risky. The S&P 500’s consumer goods sector, which includes many manufacturers of household and personal goods, was the only sector in the benchmark index to rise in April. Other safe-play sectors, such as utilities, held up better than the wider market, while technology and communications stocks were among the biggest losers.

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