Dow drops more than 500 points as S&P 500, Nasdaq heads for worst month since March 2020

US stocks were sharply lower Friday afternoon as investors weighed in on new inflation data, while tech-related stocks suffered from disappointing results from Amazon.com Inc. and a warning of rising costs from Apple Inc.

How do stock indices perform?
  • The Dow Jones Industrial Average DJIA,
    -1.91%
    fell nearly 515 points, or 1.5%, to about 33,402.

  • The S&P 500 SPX,
    -2.74%
    fell 95 points, or 2.2%, to 4,192.

  • The Nasdaq Composite COMP,
    -3.20%
    lost nearly 334 points, or 2.6%, to about 12,538.

On Thursday, the Dow was up 614.46 points, or 1.9%, while the S&P 500 gained 2.5% and the Nasdaq Composite rose 3.1%. The Dow and S&P 500 marked their best daily percentage gains since March 9, while the Nasdaq had its best day since March 16, according to Dow Jones Market Data.

For the week, the Dow is on track for a 1.2% decline, while the S&P 500 is headed for a 1.9% decline and the tech-laden Nasdaq is on track to fall 2.4%, FactSet showed. data, at the last check.

What drives markets?

US stocks fell sharply on Friday, with technology stocks weighing on indices.

“Tech is having a rough day,” Michael Reynolds, vice president of investment strategy at asset manager Glenmede, said in a telephone interview Friday.

Shares of Amazon AMZN fell more than 13% early Friday afternoon, after reporting its first loss in seven years. The company’s decline made it the biggest loser in the S&P 500 index in afternoon trading, according to data from FactSet, at its latest check.

All 11 sectors of the S&P 500 fell, with consumer staples SP500.25,
-5.78%
real estate SP500.6010,
-3.40%
and information technology SP500.45,
-3.03%
with the biggest losses, FactSet data shows. Shares of Apple Inc. AAPL,
-2.30%
fell 2.2% after the tech giant broke profits and set a record sales, but warned of billions of additional costs due to supply chain problems.

Friday marks the last trading day of April, which is set to become the worst month for the S&P 500 — down 5.3% through Thursday — since March 2020. The Nasdaq is already down 9.4% through Thursday. and is also facing its worst monthly return since that pandemic low, according to FactSet.

The month was taken by concerns on several fronts, including economic growth in China, where COVID-19 cases in several cities are forcing lockdowns, as well as supply chain disruptions caused by Russia’s war in Ukraine.

“There’s a lot that the market is struggling with right now,” Reynolds said.

The CBOE Volatility Index VIX,
+6.90%
traded around 31 noon Friday, well above the 200-day moving average of about 21.5, according to data from FactSet.

“The petrified tail chasing we’ve seen this week as stock markets fluctuate from ‘we’re all doomed, get me out’ to ‘I don’t want to miss the absolute bottom of the stock market, get me in’ may be indicative of the state of the stock market. confusion out there,” Jeffrey Halley, senior market analyst at Oanda, told clients in a note.

After weak US economic growth data for the first quarter on Thursday, the Federal Reserve’s favorite inflation gauge – the main consumer spending price index for March – rose 0.3% and the general index rose 0.9 %.

“The annual core PCE inflation slowdown is really nice to see. Inflation may have peaked in March, although the evidence is still a bit ambiguous,” Comerica Bank chief economist Bill Adams said in a note.

See: US inflation rises to 6.6% by PCE index – but there’s a silver lining

In addition to inflation concerns, the US employment cost index accelerated to 1.4% in the first quarter, from 1.0% in the last three months of 2021, according to data released Friday by the Labor Department.

Meanwhile, the University of Michigan’s final reading of US consumer confidence fell to 65.2 in April from an initial reading of 65.7, but was still the first increase so far this year.

Friday’s economic data comes ahead of next week’s two-day meeting of the Federal Reserve, which many believe will close with a 50 basis point rate hike.

See: Fed’s half percentage point rate hike baked in the pie next week

Also, billionaire investor Warren Buffett and his right-hand man Charlie Munger will be in the spotlight on Saturday as investors return to Omaha for Berkshire Hathaway Inc.’s BRK.A.
-2.07%

BRKB,
-1.70%
annual meeting. The event, dubbed “Woodstock for Capitalists,” had pretty much been held for the past two years because of COVID-19.

Do not miss: 6 things to watch as Warren Buffett hosts ‘Woodstock for Capitalists’ on Saturday

Which companies are the focus?
  • Intel Corp.
    INTC,
    -6.26%
    shares fell 5.9% after the chipmaker stuck to its full-year outlook amid expected weakness this quarter.

  • Roku Inc.
    YEAR,
    +2.96%
    shares rose 4.9% after the digital media maker reported forecasted fiscal revenues and earnings for the first quarter that were broadly in line with forecasts.

  • Robinhood Markets Inc. shares KAP,
    -1.14%
    fell 0.5% after the brokerage missed its first quarter forecasts and said fewer people were trading on the online platform.

  • Tesla Inc. shares TSLA,
    +0.76%
    increased by 2.7%. CEO Elon Musk tweeted late Thursday that he has no plans to sell more shares after a Securities and Exchange Commission filing revealed he had sold nearly $4 billion in shares of the electric car maker amid his 44 billion deal for Twitter.

  • Colgate Palmolive Co.
    CL,
    -4.79%
    shares fell 4.8% after the consumer goods maker said a tough cost environment would continue to weigh on earnings.

  • Chevron Corp. CVX shares fell 2.5% after revenues surpassed expectations on an increase in oil and gas prices, but earnings gains fell short of expectations. Exxon Mobil Corp. XOM missed first quarter earnings estimates as it posted a $3.4 billion charge related to its planned exit from Russia’s Sakhalin-1 project. Shares of Exxon fell 1.1%.

  • Honeywell International Inc. HON shares gained 3.4% after earnings and sales exceeded expectations and the aerospace and construction products company raised its outlook.

  • AbbVie Inc. ABBV shares fell 8.1% after the drug maker’s earnings fell short of Wall Street expectations. Bristol Myers Squibb Co. BMY told investors to expect less revenue from its cancer drug Revlimid in 2022 and lower adjusted earnings per share for the full year. Shares fell by 2.6%.

What about other assets?
  • The return on the 10-year Treasury TMUBMUSD10Y,
    2.887%
    rose about 4 basis points to 2.9%, according to the most recent inflation data. Yields and debt prices move opposite each other.

  • Oil futures rose higher, with the US benchmark CL.1,
    -0.63%
    were up 0.4% to about $105.80 a barrel. Gold for June delivery GCM22,
    +1.05%

    GC00,
    +1.05%
    climbed 1.1% to $1,912.20 an ounce.

  • Bitcoin BTCUSD,
    -3.49%
    fell 3.6% to $38,507.

  • The Stoxx Europe 600 SXXP,
    +0.74%
    Closed 0.7% higher Friday as London’s FTSE 100 UKX,
    +0.47%
    advanced 0.5%.

  • The Shanghai Composite SHCOMP,
    +2.41%
    Closed 2.4% higher Friday as the Hang Seng Index HSI,
    +4.01%
    in Hong Kong rose by 4%. Japanese Nikkei 225 NIK,
    +1.75%
    was closed for a national holiday.

—Barbara Kollmeyer contributed to this report.

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