Shares fell on Tuesday, adding to a losing streak that April is set to be the worst month on Wall Street in two years.
The S&P 500 index fell 2.8%, leading to a loss of 7.8% for the month. The index is on track for its worst monthly decline since March 2020, when stocks fell 12.5 percent as the coronavirus spread around the world, blocking and halting economic activity.
The steady decline – with only six days of profits in April – came as investors faced a long list of fears: that the Federal Reserve could raise interest rates much faster than economists expected; that rising prices and wages could undermine corporate profits; and that a renewed blockade in China could become another obstacle to the world economy.
Earlier this month, the International Monetary Fund predicted that global growth would slow to 3.6% this year from 6.1% in 2021. This was before Covid’s new outbreak in Beijing raised concerns about more restrictions in China. the second largest economy in the world, where cities like Shanghai have been under blockade for weeks.
“China is slowing down the rest of the world if it closes,” said Victoria Green, chief investment officer at G Squared Private Wealth, a consulting firm. “If China closes, it could halt trade and slow global aggregate demand.
On Tuesday, technology stocks led to the retreat of Wall Street, ahead of reports of profits from Alphabet, Microsoft and – later this week – Meta, Amazon and Apple. Shares of all five companies were lower. The composite Nasdaq, which is heavily weighted by technology, fell about 4 percent.
Tesla shares were also lower, falling more than 12 percent. The company’s chief executive, Elon Musk, may have to sell much of his stake in the carmaker to fund the takeover of Twitter. He has pledged $ 21 billion in cash as part of the deal, in addition to loans. Tesla shares are often more volatile than those of other large companies and could weigh heavier on the wider S&P 500 when they fall due to the company’s huge valuation.
“Tesla investors are worried that Musk may spend too much time trying to solve the problems of the social media giant, and this will take away his laser focus in winning the race for electric vehicles,” said Edward Moya, senior marketing analyzer at OANDA.
Among the worst performers in the S&P 500 was General Electric, which fell 10.3 percent after saying its outlook for the year was a “low end trend” from its previous earnings forecast, citing almost all of Wall Street’s concerns. as a factor.
“We are under increasing pressure from inflation, renewable energy and the war between Russia and Ukraine,” Lawrence Culp, the company’s chief executive, said during a conference call with investors on Tuesday as he explained the prospects. “We are also monitoring emerging areas, namely additional pressure on Covid’s supply chain and recent impacts in China.
The Russia-Ukraine war and the global economy
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Lack of base metals. The price of palladium, used in car exhaust systems and mobile phones, is rising amid fears that Russia, the world’s largest metal exporter, could be cut off from global markets. The price of nickel, another key Russian export, is also rising.
Financial turmoil. Global banks are preparing for the effects of sanctions designed to limit Russia’s access to foreign capital and limit its ability to process payments in dollars, euros and other currencies that are crucial to trade. Banks are also on the lookout for retaliatory cyber attacks from Russia.
Concerns about the economic slowdown in the United States and abroad have been weighing on investors’ minds throughout the month. Companies and consumers have already borne higher spending on goods and transport, with inflation reaching 8.5% in the year to March.
But the conflict in Ukraine and the shutdowns in China have also caused instability in energy markets, with crude oil rising in early March before receding slightly in April. This has also spread to the stock market.
“There was a pendulum that moved back and forth,” Ms. Green said. “We are moving from the claim that oil prices are too high to the fact that we will see that oil prices will fall because we do not have the demand that we thought we would see.
Brent oil futures, the international standard, rose about 2.5 percent on Tuesday to about $ 105 a barrel. West Texas Intermediate, the U.S. benchmark crude for June delivery, rose 3.2 percent to $ 101.70 a barrel.
Investors are also struggling with the Fed’s approach to raising interest rates in the coming months in an effort to cool inflation. Although Wall Street has already priced in several interest rate hikes this year, Fed officials have taken a more aggressive tone this month on their willingness to raise interest rates quickly to try to stem inflation, and analysts worry the central bank could steer the economy into recession.
“The only way to cool inflation will be to wipe out demand and raise unemployment,” said Jean Boyvin, head of the BlackRock Investment Institute. “It will not be as simple as raising interest rates as markets expect.
Mohamed Hadi contributed to the reports.
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