U.S. stocks ended sharply lower on Friday, recording their worst daily losses since 2020, with the Dow and S&P 500 suffering their worst April performance in more than five decades. The Nasdaq composite also recorded its worst April since 2008, with tech stocks leading the bloodbath.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) declined 2.8% or 939.18 points to finish at 32,977.21 points.
The S&P 500 slid 3.6% or 155.57 points to end at 4,131.93 points, to reenter the correction territory. Consumer discretionary, real estate and tech stocks were the worst performers. The index also recorded its largest single-day decline since June 2020.
The Consumer Discretionary Select Sector SPDR (XLY) fell 5.1%. The Real Estate Select Sector SPDR (XLRE) and Technology Select Sector SPDR (XLK) declined 4.8% and 4.2% respectively. All the 11 sectors of the benchmark index ended in negative territory.
The tech-heavy Nasdaq fell 4.2% or 536.89 points to close at 12,334.64 points, to hit a new for 2022. The index hit it largest single-day decline since September 2020.
The fear-gauge CBOE Volatility Index (VIX) was up 11.37% to 33.40. Decliners outnumbered advancers on the NYSE by a 3.91-to-1 ratio. On Nasdaq, a 2.85-to-1 ratio favored declining issues. A total of 12.4 billion shares were traded on Friday, higher than the last 20-session average of 11.8 billion.
Tech Stocks Lead Market Bloodbath
All the three major indexes rose higher on Thursday but closed sharply lower on Friday to end a volatile month that saw multiple fears gripping markets. April was also one of the worst months for markets in decades that turned worse on Friday.
Friday’s decline was primarily led by Amazon.com, Inc.
AMZN
after the e-commerce giant reported its first loss in seven years. Shares of Amazon plummeted 14.1% on Friday after the company reported first-quarter 2022 loss of $7.56 per share against earnings of $15.79 per share recorded in the year-ago quarter. Amazon has a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here
.
The company also gave a bleak outlook for the second quarter. Amazon said that it expects net sales between $116 billion and $121 billion for the second quarter. Net sales are expected to grow 3-7% year over year. The Zacks Consensus Estimate for net sales is pegged at $126.3 billion.
Amazon weighed heavy on other tech stocks also, with shares of Meta Platforms, Inc.
FB
declining 2.6% and Microsoft Corporation
MSFT
falling 4.2%.
Tech stocks have been suffering since the beginning of the year, with April being the worst month. April itself has been one of the worst months for the broader market as multiple worries have been denting investors’ confidence.
The Fed raised interest rates by 25 basis points in March, its first hike since 2018, to check surging inflation, which is at a 41-year high. Rising interest rates have been hurting valuations, which have been impacting tech stocks. Moreover, investors are also concerned about the large-scale lockdowns being implemented in China due to surging COVID-19 cases.
Also, the supply chain crisis arising from the ongoing Russia-Ukraine war has been disrupting business. Apple, Inc.
AAPL
warned on Friday of billions of dollars in added costs owing to the supply-chain crisis. This saw the company’s shares declining 3.7% despite the iPhone marker reporting second-quarter fiscal 2022 earnings of $1.52 per share that beat the Zacks Consensus Estimate of $1.43 per share.
Economic Data
If the existing bearish sentiment wasn’t enough, economic data released on Friday further added to the woes. The core personal consumption expenditure price index, the Fed’s preferred gauge to measure inflation, rose 5.2% on a year-over-year basis, according to the Bureau of Economic Analysis. However, it was marginally lower than the February reading of 5.3%.
On a month-over-month basis, the core consumer expenditure price index increased 0.3%, which was in line with expectations.
According to a report from the Bureau of Labor Statistics, the employment cost index, another important measure of inflation, rose 1.4% in the first quarter compared to the previous quarter.
Weekly Roundup
In one of the most volatile weeks this year, the Dow lost 2.5%. The S&P 500 and Nasdaq ended 3.3% and 3.9% lower for the week.
Monthly Roundup
For the month, Nasdaq lost 13.3%, recording its worst monthly performance since October 2008. The S&P 500 recorded its worst month since March, ending 8.85 lower. The Dow ended April 4.9% lower.
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