The decline in shares of Amazon.com and other technology stocks helped lower the S&P 500 on Friday and the worst month of March 2020.
The broad stock market index fell 1.6 percent, with losses accelerating at noon and the Dow Jones Industrial Average falling more than 300 points, or 0.9 percent. The technology-focused Nasdaq Composite fell about 1.5 percent.
The stock market is about to end April stormy. The Nasdaq Composite fell nearly 11 percent this month, continuing a heavy period of losses earlier this year. The S&P 500 fell 6.7% in April.
Throughout the month, investors dropped shares of some of the largest technology companies that have been stock market favorites for most of the past decade, bringing the market up from its lowest levels in March 2020.
The Federal Reserve is raising interest rates, making many of the high-value companies that have jumped in recent years unattractive. Many pandemic-era winners have also returned to earth as consumer tastes have evolved since 2020. The earnings season has recently been littered with some disappointment on the part of the group, leading to staggering moves following reports.
Shares of Amazon fell 12% in lunch trading, on the way to the biggest one-day decline since at least 2014. The company reported its first quarterly loss in seven years – a result that reflects broad economic trends related to the decline in online shopping. -high costs of inflation and supply chain problems, as well as market shocks when starting electric vehicles.
Apple warned on Thursday that the revival of Covid-19 in China threatens to hamper sales of up to $ 8 billion in the current quarter. Shares fell 0.7% in recent trading. Netflix shares fell more than 30 percent last week after a profit report showed the company lost subscribers. Movements in large technology companies can have a huge impact on major stock indices due to their higher weight than other stocks.
“We are entering a regime of higher volatility when the fundamentals are important again,” said Aashish Vyas, investment director at Resonanz Capital. “We seem to be in a systemic change.”
Of course, some of the companies impressed investors with their latest reports. Investors welcomed a solid earnings report from Meta Platforms, which helped it recoup some of its losses this year, although shares remain down nearly 40% for 2022.
For most of the month, many retailers and market watchers remained focused on the Twitter drama as Tesla CEO Elon Musk took a stake in the company and then struck a deal to buy it. Tweets and negotiations throughout the process sparked strong volatility in the shares of both companies. Shares of Twitter rose 29% this month, while shares of Tesla fell 16%.
Tesla shares recently added 4.3% after CEO Elon Musk revealed that he had recently sold about $ 4 billion worth of shares in the electric car maker to fund the takeover of Twitter, but said no plan additional sales.
Traders working on the floor of the New York Stock Exchange. Stock losses on Friday remain volatile for key indices, especially technology stocks.
Photo: BRENDAN MCDERMID / REUTERS
In economic data, the Fed’s preferred measure of inflation, the personal consumption-cost index for core inflation, which excludes variable food and energy costs, rose 5.2% in March from a year earlier. Consumer spending in the US in March increased by 1.1% over the previous month.
“The reality is that weeks after this blockade, we are returning to supply chain disruptions that could affect inflation and put central banks in a difficult position,” said Esti Duek, chief investment officer at FlowBank. “We have seen the beginning of improvements in supply chains, but this will probably be reversed if these blockages in China last longer.
Giant fluctuations are not limited to technology stocks. The broad S&P 500 fell about 11.5 percent this year, on its way to its worst four months to begin a year since 1942. Investors around the world were also worried about the dramatic changes in assets from currencies to bonds.
In the bond markets, the yield on the benchmark 10-year government securities is on track to reach its biggest monthly gain since 2009. It was recently at 2.906%.
In foreign exchange markets, the dollar is rising while the yen is falling. The yen, a typical haven for investors around the world, is falling to a 20-year low against the dollar, changing the typical dynamics of world markets and causing concern among investors.
The WSJ, which measures the US currency against a basket of 16 others, fell 0.4% on Friday, but strengthened against other currencies this year in anticipation of Fed rate hikes, which are expected to happen faster and more aggressively than in the eurozone and Japan.
Brent crude, the international benchmark for oil, added 1.6 percent to $ 108.96 a barrel in recent trade. The cut-off of gas supplies from Moscow to some countries has worried traders from further disruptions as European countries try to distance themselves from Russian energy.
Abroad, the pan-continental Stoxx Europe 600 added 0.7%.
In Asia, shares of Alibaba and other Chinese technology have jumped double-digit levels amid investor hopes that the Chinese government will do more to support the sector and the economy as a whole. The jump helped Chinese stocks recover some of their recent losses, while the yuan also managed to regain some positions against the dollar after selling off sharply in recent sessions.
Hong Kong’s Hang Seng index rose 4%. The Shanghai Composite Index rose 2.4%.
Write to Caitlin Ostroff at caitlin.ostroff@wsj.com
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