Dow Jones falls 900 points and Nasdaq falls 4% to close a brutal month

US stocks sank on Friday with the Nasdaq Composite marking its worst month since 2008 as Amazon became the latest victim of April’s tech-driven selloff.

The tech-heavy Nasdaq Composite fell nearly 4.2% to 12,334.64, weighed down by Amazon’s post-earnings slide. The S&P 500 fell 3.6% to 4,131.93. The Dow Jones Industrial Average lost 939.18 points, or about 2.8%, to 32,977.21.

The Nasdaq finished at a new low for 2022 and the S&P 500 did too, with the main stock market benchmark surpassing its previous low in March.

Stocks closed a gloomy month as investors faced a series of headwinds, from the Fed’s monetary tightening, rising rates, persistent inflation, spikes in China’s Covid cases and the war in course in Ukraine.

“Markets are trying to wrap up a lot of different cross-currents,” said Yung-Yu Ma of BMO Wealth Management. “With the Fed raising rates and all the uncertainties facing the global economy, it’s hard to get excited about paying the multiples that are currently prevalent in many places in the market.”

The Nasdaq fell about 13.3% in April, its worst monthly performance since October 2008 amid the financial crisis. The S&P 500 lost 8.8%, its worst month since March 2020 at the start of the Covid pandemic. The Dow Jones fell 4.9% for the month.

Tech stocks have been the epicenter of April’s sell-off as high interest rates hurt valuations and supply chain issues stemming from Covid and the war in Ukraine disrupted business.

Amazon sank about 14% on Friday, its biggest drop since 2006, after the e-commerce giant reported a surprise loss and issued weak second-quarter earnings guidance.

“Current market performance threatens to transition from a long and painful ‘correction’ to something more worrisome,” Marketfield Asset Management Chairman Michael Shaoul wrote.

“March 2020, for example, saw very steep declines, but equally rapid recoveries. It seems much more likely that the current episode will impose lasting losses on investors than were accumulated during the 2021 rally, and it’s best to think of a ‘bear market’ progressive’, which is constantly casting its net on previous market leadership,” added Shaoul.

The Nasdaq Composite is in bear market territory, 23.9% below its intraday high. The S&P 500 is 14.3% off its record and the Dow Jones is 10.8% below it.

Friday concluded one of the busiest weeks for the first-quarter earnings season and a particularly intense one for tech companies, buoying investor sentiment throughout the week.

Apple shares fell about 3.7% after management said supply chain restrictions could hamper fiscal third-quarter revenue.

Intel fell 6.9% after the company issued weak guidance for its fiscal second quarter.

CNBC Pro Stock Picks & Investing Trends:

About 80% of S&P 500 companies have beaten expectations for quarterly earnings, and about half of the index’s members have reported results so far, according to FactSet.

“Despite what we see as a strong period of overall gains thus far, the positive results seem to be overshadowed by some of the broader concerns related to inflation and the Federal Reserve,” said Brian Belski of BMO. in a note to customers.

A hot inflation reading on Friday underscored the difficult environment. The Core Personal Consumption Expenditures Price Index, the Fed’s preferred gauge of inflation, rose 5.2% from a year earlier.

Next week, investors await the Fed policy meeting, the April jobs report and a flurry of corporate earnings from the likes of Pfizer, Starbucks, Uber and more.

The S&P 500 is now down 13.3% in 2022. The Nasdaq is down 21.2% and the Dow nearly 9.3% lower on the year.

Add Comment