Stocks trim losses, turn positive in last swing of volatile market

Stocks rose slightly in volatile trading on Friday as investors try to find support after the Dow Jones Industrial Average posted its worst day since 2020.

The Dow fell 260 points, or 0.8%. The S&P 500 lost 0.8%, while the Nasdaq Composite fell 0.8%. The tech-heavy index is now down about 25% from its all-time high last November.

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 bore the brunt of Thursday’s slide, with cloud companies, e-retailers and mega-cap names all seeing sharp declines. That trend continued on Friday, with Microsoft and Amazon falling more than 1% and Netflix falling 2.5%.

Speculative areas of the market, such as biotech and solar energy, were also hit hard on Friday. Illumina fell more than 11%, while Enphase Energy fell almost 5%.

Movements in the Treasury market appeared to be weighing on stocks on Friday. The 10-year Treasury yield rose above 3.12% for the first time since 2018, but pulled back from that level later in the session.

On the earnings front, shares of Under Armor fell more than 22% after the apparel company missed estimates in earnings. That appeared to hurt rival Nike, whose shares fell more than 6% and weighed on the Dow.

DoorDash and Block fell 12% and 3% respectively after missing key estimates in their reports.

The 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.

Friday’s losses put all three major indices on track to end the week lower despite starting three straight positive sessions.

— CNBC’s Michael Bloom contributed to this report.

Leave a Comment