The New York Stock Exchange on Friday blamed another week of losses, ending in deep losses, fearing the Federal Reserve’s aggressive approach to inflation could slow economic growth.
According to the final result, the Dow Jones Industrial Average fell 2.82% to 33,811.40, its worst performance this month. The tech-heavy Nasdaq lost 2.55% to 12,839.29 and the S&P 500 lost 2.77% to 4,271.80.
Prices continued to react to U.S. central bank (Fed) Governor Jerome Powell’s hawkish comments on inflation. The central bank governor said on Thursday that a 0.5 percentage point increase in the key interest rate was “on the table” at the next currency meeting in early May.
“Bad mood today! Spartan Capital’s Peter Cardillo concluded. “Obviously, after what Jerome Powell said, the market is worried that rates will rise again: the decline started on Thursday and accelerated on Friday,” the analyst noted.
Friday marked the fourth straight weekly decline for the All-Star index and the third straight weekly decline for the Nasdaq and S&P 500. All thirty values of the Dow are in the red.
Art Hogan of National Securities found “very anxiety about the Fed’s aggressiveness.” “The market was spooked by how quickly 10-year bond yields were rising,” Hogan added.
The 10-year Treasury bill rate held at 2.89% after nearing the 3% mark overnight (2.96%).
Harris Financial Group’s Jamie Cox goes further: “The market is very nervous about the growing possibility of Fed policy wrong.”
“When Fed officials suggested a 50 basis point hike, the market immediately started trying to price in a 75 basis point hike,” the analyst translated. “It’s really crazy. Most investors are better off ignoring these expectations (…) while waiting to see what rates actually look like”.
Some remain optimistic about the week ahead, as Microsoft, Apple and Google (Alphabet) in particular have impressive business results in the plan.
“The market will focus on the outcome again, and maybe they will reverse the negative sentiment created by the Fed’s aggressive actions,” suggested Peter Cardillo.
Eleven sectors of the S&P closed lower, with materials stocks leading the pack (-3.73%), followed by healthcare services, telecommunications and banking. The energy sector fell more than 2.40% after crude oil prices fell, weighed down by Covid-19-related restrictions in China.
Big names in tech, exceptional growth stocks that are very sensitive to interest rates, look like Apple (-2.78%), Facebook (Meta, -2.11%) or Google (-4.26%). Netflix, which took a hit this week after declining subscribers, was still down 1.24% at $215.52.
Despite better-than-expected results for the first quarter of 2022, American Express fell 2.75% to $180.64, helped by a recovery in economic activity in many countries and higher spending on travel and leisure.
Shares of the Gap apparel brand tumbled nearly 18 percent to $11.72 after a quarterly earnings forecast cut and the departure of a director at its subsidiary Old Navy.
Snap, the parent company of social network Snapchat, rose 1.16 percent to $20.76. While the social network’s ad sales fell in the first quarter as the Ukraine war dampened investor spending, the group said the number of users of the service, which is very popular among young people, rose 18.% to 18%. 332 million.
Twitter recovered 3.93% to $48.93 after a week surrounding Elon Musk’s desire to buy the social network. The Tesla boss seems determined to dabble in the microblogging network, and Twitter’s board has taken a “poison pill” to dissuade him.
U.S. hygiene products group Kimberly-Clark rose 8.13% to $138.51 after announcing good quarterly results and a higher forecast for this year’s sales.