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

The Dow Jones Industrial Average fell more than 900 points on Friday as another sharp sell-off of technology stocks added to Wall Street’s loss in April, leaving the S&P 500 with its biggest monthly slump since the start of the pandemic.

A sharp drop in Amazon weighed on the market after the internet retail giant suffered its first loss since 2015. The drop knocked more than $ 200 billion out of Amazon’s market value.

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

The Nasdaq composition, heavily weighted with 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 switched between recessions and gains during the week as the latest round of corporate earnings hit the current market. Investors have reviewed a particularly heavy batch of financial results from large technology companies, industrial companies and retailers.

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

“When you start hearing from companies that say demand may have fallen, concerns about a deeper downturn in the economy are taking momentum, and that’s where we are,” said Quincy Krosby, LPL Financial stock strategist.

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

“Rising cost pressures and uncertain prospects from the biggest technology names have caused investors to get excited over the weekend, and investors are unlikely to be comfortable with the Fed, which is largely expected to deliver a 50 basis point increase along with a hawkish one. message next week, ”said Charlie Ripley, senior investment strategist at Allianz Investment Management.

The S&P 500 fell 155.57 points to 4,131.93 on Friday. The benchmark index has now fallen by 13.3% for the year. The Dow fell 939.18 points to 32,977.21. Nasdaq fell 536.89 points to 12,334.64. That is a drop of 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 been leading the market lower all month as traders omit the high-flying sector. Tech had made huge gains during the pandemic and is now starting to look overpriced, especially with interest rates set to rise sharply as the Fed escalates its fight against inflation.

Internet retail giant Amazon fell 14%, one of the biggest declines in the S&P 500, the day after reporting a rare quarterly loss and giving investors a disappointing revenue forecast. The weak update from Amazon comes as Wall Street worries about a potential slowdown in consumer spending 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 major disruption between greater demand and lagging supplies. Russia’s invasion of Ukraine has only increased inflation concerns as it drives price increases on oil, natural gas, wheat and maize.

The Department of Commerce reported Friday that an inflation monitor closely monitored by the Federal Reserve rose 6.6% in March compared to a year ago, the highest 12-month jump in four decades and further evidence that price increases are pushing household budgets and the health of the economy.

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

Bond yields rose after the warm measures of inflation. The yield on the 10-year government bond rose to 2.92% from 2.85%.

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

Much of the concern on Wall Street in April has been centered around how quickly the Fed will raise its benchmark rate and whether an aggressive series of increases will hamper economic growth. The chairman of the Fed 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 primary day-to-day interest rate once, the first increase since 2018, and Wall Street expects several major increases over the coming months.

Investors spent most 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 grocery sector, which includes many household and personal goods producers, was the only sector in the benchmark index to make progress in April. Other safe-play sectors, such as utilities, outperformed the broader market, while technology and communications stocks were among the biggest losers.

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