Losses for technology stocks accelerated on Wall Street on Friday, propelling the Nasdaq Composite to its biggest monthly loss since the 2008 financial crisis.
In a day of brutal selling, the Dow Jones Industrial Average fell 939 points, or 2.8 percent, to end April down almost 5 percent for the month.
The S&P 500 posted its worst month since the pandemic began, losing 3.6 percent on Friday and nearly 9 percent since March.
But it was the tech-heavy Nasdaq that suffered the sharpest losses, led by a 14 percent plunge in Amazon shares, marking the online retail giant’s steepest one-day drop since 2006.
The Nasdaq ended the session down 4.2 percent on the day and 13 percent in April, its worst monthly performance since the Great Recession.
The Nasdaq ended the session down 4.2 percent on the day and 13 percent in April, its worst monthly performance since the Great Recession
The Dow Jones Industrial Average fell 939 points, or 2.8 percent, and was down almost 5 percent at the end of April
The S&P 500 posted its worst month since the pandemic began, losing 3.6 percent on Friday and nearly 9 percent since March
All 11 sector indices in the S&P 500 fell, led by consumer discretionary and real estate.
Poor results and concerns about aggressive rate hikes by the US Federal Reserve have hit mega-cap technology and growth stocks this month.
“Market participants are nervous initially, so there’s a quick trigger with these names when there’s uncertainty,” said Keith Buchanan, senior portfolio manager at Globalt Investments in Atlanta.
“When assumptions about the growth of these companies don’t hold true, there’s definitely a ‘shoot first, ask questions later’ mentality.”
Big Tech has led the market lower all month as traders avoid the high-flying sector.
Tech, which had posted gargantuan gains during the pandemic, is starting to look overpriced, especially given that interest rates are set to rise sharply as the Fed ramps up its fight against inflation.
Internet retail giant Amazon slumped 14.2 percent, the biggest drop in the S&P 500, after reporting its first quarterly loss since 2015 and giving investors a disappointing sales forecast.
Internet retail giant Amazon slumped 14.2 percent, the biggest drop in the S&P 500
Much of the concern on Wall Street in April revolved around how quickly the Fed will hike interest rates. Pictured: traders on the NYSE
By the closing bell, Amazon founder Jeff Bezos saw more than $22.5 billion wiped from his net worth just by Friday’s sell-off alone.
Amazon’s weak update comes as Wall Street worries about a possible slowdown in consumer spending along with rising inflation.
The prices of everything from groceries to gasoline have been rising for more than a year.
Russia’s invasion of Ukraine has only added to inflation concerns as it fuels price increases for oil, natural gas, wheat and corn.
New data on Friday showed that the personal consumer spending index — the Fed’s preferred measure of inflation — rose 6.6 percent in the 12 months to March, the largest annual rise in 40 years.
The Fed is due to meet next week, with traders betting on a 50 basis point rate hike to combat rising inflation.
Signs of an aggressive rate hike, the war in Ukraine and China’s COVID lockdowns have fueled fears of an economic slowdown.
Data on Thursday showed that the US economy contracted unexpectedly in the first quarter, with gross domestic product contracting 1.4 percent, a worrying sign.
The US economy shrank in the past quarter for the first time since the pandemic recession
The CPI rose 8.5% year-on-year in March, a 41-year high
Exxon Mobil shares slid on Friday after the company took a $3.4 billion writedown over its exit from Russia. Chevron also fell after its first-quarter profit was underwhelming.
Nevertheless, the reporting season for the first quarter was better than previously expected.
Nearly half of the S&P 500 companies reported through Thursday, and 81 percent of them beat Wall Street expectations.
According to data from Refinitiv, only 66 percent typically beat estimates.
Much of the concern on Wall Street in April revolved around how quickly the Fed will raise interest rates and whether a series of aggressive rate hikes will hurt economic growth.
The Fed chairman has hinted that the central bank could hike short-term interest rates by twice the usual amount at upcoming meetings starting next week.
It has already raised its key overnight rate once, the first such hike since 2018, and Wall Street expects several large hikes in the coming months.
Investors spent much of April reallocating money from big tech companies, whose stock values are benefiting from low interest rates, to areas perceived as less risky.
The consumer staples sector of the S&P 500, which includes many manufacturers of household and personal goods, is on track to be the only sector in the benchmark index to post gains in April.
Other safe-play sectors such as utilities fared better than the broader market, while technology and communications were among the biggest losers.