Nasdaq posts worst month since October 2008 amid recession fears
US stocks plunged, with the Nasdaq marking its worst month since October 2008 and the S&P notching its worst month since March 2020 at the onset of the Covid pandemic.
The Nasdaq fell around 12 per cent this month, the S&P 500 lost more than 7 per cent and the Dow was off by nearly 4 per cent.
The tech-heavy Nasdaq fell 4.2 per cent on Friday, dragged down by Amazon, which dropped nearly 15 per cent ater it missed earnings expectations, CNN reported.
The S&P 500 shed about 3.6 per cent on Friday, while the Dow dropped about 940 points, or 2.8 per cent.
The most closely watched inflation reading released on Friday the core personal consumption expenditures price index -rose 5.2 per cent from a year ago, spelling more trouble for the economy.
An ever-growing number of headwinds are leaving investors unsure of what comes next. This earnings season has been lukewarm, and US gross domestic product dropped by 1.4 per cent, falling well below analysts’ estimates of a 1 per cent gain.
The Federal Reserve has shited to a hawkish stance, indicating it will increase the pace at which it raises interest rates next week, the report said.
Globally, the Russia-ukraine conflict exacerbated commodity price inflation and let companies uncertain about their secondquarter outlook.
China has seen worsening growth and continues to ratle global supply chains with its zero-covid policy shutdowns, and the deglobalisation trend is hurting multinational companies in the S&P, CNN reported.
The Nasdaq is now in bear market territory, about 23 per cent below its high. The S&P 500 is more than 13 per cent lower than its high and the Dow is 10 per cent lower than its record.
Bank of America analysts trimmed 100 points off their year-end S&P 500 target on Friday, to 4,500. The average peak-to-trough decline in the S&P 500 amid recessions is about 32 per cent, they said, meaning that the current 10 per cent year-to-date decline “can be very roughly interpreted as discounting a one-third chance of a recession”.
If the probability of a recession rises, the bank said, steep falls could continue, CNN reported.
Wall Street tumbled on Friday at the end of a volatile week, as Amazon slumped following a gloomy quarterly report, and as the biggest surge in monthly inflation since 2005 spooked investors already worried about rising interest rates.
Amazon.com Inc tumbled 14 per cent, on track for its steepest one-day drop since 2006 and leaving the widely-held stock near two-year lows. Late on Thursday, the e-commerce giant delivered a disappointing quarter and outlook, swamped by higher costs to run its warehouses and deliver packages.
Apple Inc, the world’s most valuable company, dropped 2.2 per cent ater its glum outlook overshadowed record quarterly profit and sales.
All 11 S&P 500 sector indexes fell, led lower by Consumer Discretionary, down 4.4 per cent, followed by a 2.92 per cent loss in Real Estate.
Downbeat results and worries about aggressive monetary policy tightening by the Federal Reserve have hammered megacap technology and growth stocks this month.
“Market participants are nervous to begin with, so there is a quick trigger when it comes to these names when there’s any uncertainty,” said Keith Buchanan, senior porfolio manager at Globalt Investments in Atlanta. “When assumptions about these companies’ growth fail to materialise, then there’s definitely a ‘shoot first and ask questions later’ mentality.” The Nasdaq has lost about 12 per cent in April, its worst monthly performance since the global financial crisis in 2008.
Year to date, the S&P 500 has lost 12 per cent, marking the index’s worst four-month start of a year since 1942.
Adding to worries on Wall Street, data showed the personal consumption expenditures price index - the Federal Reserve’s favored measure of inflation - shot up 0.9 per cent in March ater climbing 0.5 per cent in February.
The Fed is set to meet next week, with traders beting on a 50-basis-point rate hike to combat surging inflation.
Signs of aggressive monetary policy tightening, the Ukraine war and China’s COVID lockdowns have fueled fears of an economic slowdown. Data on Thursday showed the US economy unexpectedly contracted in the first quarter.
In aternoon trading, S&P 500 was down 2.40 per cent at 4,184.66 points.
The Nasdaq declined 2.78 per cent to 12,514.30 points, while Dow Jones Industrial Average was down 1.65 per cent at 33,356.43 points.
Exxon Mobil Corp slipped 1 per cent ater it took a $3.4 billion writedown due to its exit from Russia. Chevron Corp dropped 2.4 per cent ater its first-quarter profit underwhelmed.
The Nasdaq fell around 12 per cent this month, the S&P 500 lost more than 7 per cent and the Dow was off by nearly 4 per cent