Stocks lost ground in choppy trading on Friday as investors struggled to find a bottom after a dramatic week in which the Dow Jones Industrial Average posted its best and worst days since 2020.
The S&P 500 lost 0.57% to close at 4,123.34, while the Nasdaq Composite fell 1.40% to close at 12,144.66. The Dow Jones lost 98.60 points, or 0.30%, to finish at 32,899.37. Friday’s losses secured a losing week for all three major indices despite starting the period with three straight positive sessions.
The moves came after shares sold off sharply on Thursday. The Dow Jones lost more than 1,000 points, and the tech-heavy Nasdaq Composite fell almost 5%. Both indexes posted their worst single-day declines since 2020. The S&P 500 fell 3.56%, its second-worst day of the year.
Thursday’s losses erased the big rally after Wednesday’s Federal Reserve meeting. Fed Chairman Jerome Powell ruled out the possibility of further rate hikes on Wednesday, sending the S&P 500 and Dow to their best daily gains since 2020.
“The widely anticipated relief rally seen in stocks and bonds after the Fed ‘less aggressive than feared’ on Wednesday was short-lived,” Barclays strategist Emmanuel Cau said in a note to investors. customers. “Although aggressive 75bp hikes in the future may be off the table, the implied cycle of policy tightening ahead remains very aggressive, in our view. Unless rising inflation quickly reverses course (see the US CPI print next Wednesday), central banks may not have a choice.” option but to slow growth to curb inflation and maintain credibility.
Tech stocks were once again an area of weakness for the market on Friday. Amazon fell 1.4%, while Microsoft and Nvidia fell around 0.9%. Netflix and Crowdstrike fell 3.9% and 8.9%, respectively.
Speculative areas of the market, such as biotech and solar energy, were hit hard on Friday. Illumina fell more than 14%, while Enphase Energy fell 8.4%.
Technology underperformed the market all week, particularly e-commerce stocks. Amazon and Shopify ended the week down about 7.7% and 11.6%, respectively.
“That underperformance that we’ve seen is directly related to rising real yields, which are now in positive territory,” said Angelo Kourkafas, investment strategist at Edward Jones. “The problem with technology is not just valuation pressures as a result of a different interest rate regime, but there’s also been some demand push… That’s one of the key trends so far in technology. earnings season.
For the week, the Dow ended down 0.24% for its sixth consecutive negative week. The S&P 500 and the Nasdaq ended down 0.21% and 1.54%, respectively, for the fifth straight week of losses.
The Nasdaq closed about 25% below its all-time high last November.
Movements in the Treasury market appeared to be weighing on stocks on Friday. The 10-year Treasury yield rose to 3.13% for the first time since 2018, roughly coinciding with daily lows for stocks, but pulled back from that level later in the session.
Energy was a bright spot for the market, with EOG Resources jumping 7.1%. Oil prices rose again on Friday, which is positive for energy stocks but raises concerns about slowing economic growth and rising inflation.
On the earnings front, shares of Under Armor fell more than 23% after the apparel company missed estimates in earnings. That appeared to hurt rival Nike, whose shares fell 3.5% and weighed on the Dow.
Cigna insurance shares rose nearly 6% after a better-than-expected quarterly report.
Friday’s losses came despite an April jobs report that showed a gain of 428,000 jobs, more than the 400,000 expected by economists surveyed by Dow Jones.
One area of weakness in the report was the labor force participation rate, which changed little from month to month and remains 1.2 percentage points below its pre-pandemic level. Economists believe that a recovery in the share could help curb rising wages and, by extension, inflation.
“If we’re going to have a soft landing, we’re going to have to see a recovery in participation at a fairly rapid pace,” said Luke Bartholomew, senior economist at Abrdn.
Elsewhere in the economic data, consumer credit data from the Fed showed an increase of $52.4 billion in March, more than double what economists had expected, according to Dow Jones.
— CNBC’s Michael Bloom contributed to this report.
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