US stocks slide after Amazon’s quarterly loss

US stocks slide after Amazon’s quarterly loss

US stocks slide after Amazon's quarterly loss

A slump in shares of Amazon.com and other tech stocks helped push the S&P 500 lower on Friday and into its worst month since March 2020.

The broad stock index fell 1.6%, with losses accelerating at midday, and the Dow Jones Industrial Average fell more than 300 points, or 0.9%. The technology-focused Nasdaq Composite fell about 1.5%.

The stock market is on track to end April on a tumultuous note. The Nasdaq Composite is down nearly 11% this month, continuing a painful streak of losses to start the year. The S&P 500 fell 6.7% in April.

Throughout the month, investors dumped shares of some of the biggest tech companies, which had been stock market darlings for much of the past decade and led the market higher from its March 2020 lows. .

The Federal Reserve is raising interest rates, making many of the high-valuation companies that have soared in recent years unattractive. Many pandemic-era winners have also come down to earth as consumer tastes have evolved since 2020. Recently, the earnings season has been littered with high-profile disappointments from the group, leading to giddy moves after reports.

Amazon shares fell 12% in midday trading, on track for the biggest one-day decline since at least 2014. The company posted its first quarterly loss in seven years, a result that reflects the major economic trends linked to a collapse in online shopping, on the rise. costs related to inflation and supply chain issues, and market jitters about electric vehicle startups.

Apple warned Thursday that the resurgence of Covid-19 in China threatens to hamper sales of up to $8 billion in the current quarter. The shares are down 0.7% in recent trades. Last week, Netflix shares fell more than 30% after the earnings report showed the company had lost subscribers. Moves in big tech companies can have outsized impacts on major stock indices due to their higher weighting relative to other stocks.

“We are entering a higher volatility regime, when fundamentals matter again,” said Aashish Vyas, chief investment officer at Resonanz Capital. “It looks like we’re at systemic change.”

Of course, some companies have impressed investors with their latest reports. Investors applauded a strong earnings report from Meta Platforms, helping it recoup some of its losses this year, although the stock remains down nearly 40% for 2022.

For much of the month, many traders and market watchers remained obsessed with the drama surrounding Twitter, as Tesla Chief Executive Elon Musk took a stake in the company, then struck a deal for the company. to buy. The tweets and negotiations throughout the process have spurred intense volatility in the shares of both companies. Twitter shares are up 29% this month, while Tesla shares are down 16%.

More recently, shares of Tesla rose 4.3% after chief executive Elon Musk revealed he had recently sold about $4 billion worth of shares in the electric car maker to fund its takeover of Twitter. but said no further sales were planned.

Traders working on the floor of the New York Stock Exchange. Friday’s equity losses continue to be volatile for major indices, and tech stocks in particular.


Photo:

BRENDAN MCDERMID/REUTERS

In economic data, the Fed’s preferred measure of inflation, the personal consumer spending index of core inflation, which excludes volatile food and energy costs, rose 5, 2% in March compared to the previous year. Consumer spending in the United States in March rose 1.1% from the previous month.

“The reality is that weeks after this lockdown, we are back to supply chain disruptions which could impact inflation and which could put central banks in difficult positions,” said Esty Dwek, director. investments at FlowBank. “We have seen the beginning of improvements in supply chains, but that should reverse if these lockdowns in China last any longer.”

The giant swings weren’t limited to tech stocks alone. The broad S&P 500 has fallen around 11.5% this year, on track for its worst four months to start a year since 1942. Investors around the world have also been alarmed by the dramatic moves in currency assets to the obligations.

In bond markets, the yield on the benchmark 10-year Treasury is on course for its biggest monthly gain since 2009. It recently hovered at 2.906%.

In the foreign exchange markets, the dollar soared while the yen collapsed. The yen, a typical safe haven for investors around the world, fell to a 20-year low against the dollar, upending the typical dynamics of global markets and sparking investor unease.

The WSJ Dollar Index, which measures the US currency against a basket of 16 others, fell 0.4% on Friday but has strengthened against other currencies this year in anticipation of Fed rate hikes, which should happen faster and more aggressively than in the Eurozone and Japan.

Brent crude, the international benchmark for oil, added 1.6% to $108.96 a barrel in the latest trades. Moscow’s cut of gas supplies to some countries has traders worried about further disruptions as European countries try to move away from Russian energy.

Overseas, the pancontinental Stoxx Europe 600 index gained 0.7%.

In Asia, Alibaba and other Chinese tech stocks jumped double-digit percentages on investor hope that the Chinese government would do more to support the sector and the wider economy. The surge helped Chinese stocks recoup some of their recent losses, while the yuan also recovered against the dollar after selling off sharply in recent sessions.

Hong Kong’s Hang Seng Index gained 4%. The Shanghai Composite Index rose 2.4%.

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com

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