Nasdaq plunges 4% to end worst month since Great Recession
Tech stock losses accelerated on Wall Street on Friday, pushing the Nasdaq composite to its biggest monthly loss since the 2008 financial crisis.
In a day of brutal selling, the Dow Jones Industrial Average fell 939 points, or 2.8%, ending April down nearly 5% for the month.
The S&P 500 recorded its worst month since the start of the pandemic, losing 3.6% on Friday and nearly 9% since March.
But it was the tech-heavy Nasdaq that posted the heaviest losses, led by a 14% plunge in Amazon shares, marking the retail giant’s biggest one-day drop in history. online since 2006.
The Nasdaq ended the session down 4.2% on the day and 13% in April, its worst monthly performance since the Great Recession.
The Nasdaq ended the session down 4.2% on the day and 13% in April, its worst monthly performance since the Great Recession
The Dow Jones Industrial Average fell 939 points, or 2.8%, ending April down nearly 5% for the month
The S&P 500 recorded its worst month since the start of the pandemic, losing 3.6% on Friday and nearly 9% since March
All 11 S&P 500 sector indices fell, led by consumer discretionary and real estate.
Disappointing earnings results and worries about aggressive interest rate hikes by the Federal Reserve hammered megacap tech and growth stocks this month.
“Market participants are nervous initially, so there’s a quick trigger when it comes to these names when there’s uncertainty,” said Keith Buchanan, senior portfolio manager at Globalt Investments in Atlanta.
“When assumptions about how these companies will grow don’t materialize, there’s definitely a ‘shoot first and ask questions later’ mentality.”
Big Tech led the market lower all month, with traders avoiding the high-flying sector.
The tech had made gigantic gains during the pandemic and is now starting to look overvalued, especially with interest rates set to rise sharply as the Fed steps up its fight against inflation.
Internet retail giant Amazon fell 14.2%, the biggest drop in the S&P 500, after reporting its first quarterly loss since 2015 and giving investors a disappointing earnings forecast.
Internet retail giant Amazon fell 14.2%, the biggest drop in the S&P 500
Much of the anxiety on Wall Street in April focused on how quickly the Fed will raise its benchmark interest rate. Pictured: NYSE traders
At the closing bell, Amazon founder Jeff Bezos saw more than $22.5 billion wiped out of his net worth in Friday’s sale alone.
Amazon’s weak update comes as Wall Street worries about a potential slowdown in consumer spending as well as rising inflation.
Prices for everything from food to gasoline have been skyrocketing for over a year now.
Russia’s invasion of Ukraine has only heightened inflation concerns as it drives up the prices of oil, natural gas, wheat and corn.
New data on Friday showed that the The personal consumption expenditure price index – the Fed’s preferred measure of inflation – jumped 6.6% in the 12 months to March, the largest annual increase in 40 years.
The Fed is due to meet next week, with traders betting on a 50 basis point rate hike to combat soaring inflation.
Signs of aggressive rate hikes, the war in Ukraine and COVID lockdowns in China fueled fears of an economic slowdown.
Data on Thursday showed the US economy unexpectedly contracted in the first quarter, with gross domestic product shrinking 1.4% in a worrying sign.
The US economy contracted in the last quarter for the first time since the pandemic recession
The consumer price index rose 8.5% in March from a year ago, a 41-year high
Shares of Exxon Mobil fell on Friday after suffering a $3.4 billion writedown due to its exit from Russia. Chevron also fell after its first quarter profit was disappointing.
Still, the first quarter earnings season has been overall better than expected so far.
Nearly half of S&P 500 companies have released their report through Thursday and 81% of them beat Wall Street expectations.
Typically, only 66% exceeded estimates, according to Refinitiv data.
Much of the anxiety on Wall Street in April focused on how quickly the Fed will raise its benchmark interest rate and whether an aggressive round of hikes will dampen economic growth.
The Fed chairman indicated that the central bank may raise short-term interest rates to double the usual amount in upcoming meetings, starting next week.
It has already raised its overnight rate once, the first such increase since 2018, and Wall Street expects several big increases in the coming months.
Investors spent much of April shifting money from big tech companies, whose stock values benefit from low interest rates, to areas considered less risky.
The S&P 500 consumer staples sector, which includes many home and personal goods makers, is on track to be the only sector in the benchmark to post gains in April.
Other safe sectors, such as utilities, held up better than the broader market, while technology and communications stocks were among the biggest losers.