Stocks lost ground in volatile trading on Friday, as investors struggled to search out support after the Dow Jones Industrial Average posted its worst day since 2020.
The S&P 500 shed 1.2%, while the Nasdaq Composite fell 1.7%. The Dow was down 345 points, or about 1%.
The moves got here after stocks sold off sharply on Thursday. The Dow lost greater than 1,000 points, and the tech-heavy Nasdaq Composite fell nearly 5%. Each indexes notched their worst single-day drops since 2020. The S&P 500 fell 3.56%, its second-worst day of the 12 months.
Thursday’s losses erased Wednesday’s big post-Federal Reserve meeting rally. Fed Chair Jerome Powell ruled out the prospect of larger rate hikes on Wednesday, sending the S&P 500 and the Dow to their best every day gains since 2020.
“The widely anticipated relief rally seen in equities and bonds post the ‘less hawkish than feared’ Consumed Wednesday was short lived,” Barclays strategist Emmanuel Cau said in a note to clients. “Although aggressive 75bp hikes going forward could also be off the table, the implied policy tightening cycle ahead continues to be very hawkish, in our view. Unless surging inflation quickly reverses its course (watch US CPI print next Wednesday), central banks may don’t have any other alternative than slowing growth to slow inflation and stay credible.”
Technology stocks bore the brunt of Thursday’s fall, with cloud firms, e-retailers and mega-cap names seeing steep declines.
The most important stocks out there shuffled between gains and losses on Friday. Shares of Apple held on to slight gains, while Amazon and Microsoft dipped.
Speculative areas of the market equivalent to biotech and solar energy were hit hard on Friday. Illumina dropped greater than 16%, while Enphase Energy fell 8.5%.
“That underperformance that we now have seen is directly tied to the rise in real yields, which at the moment are in positive territory,” said Angelo Kourkafas, an investment strategist at Edward Jones. “The problem with tech isn’t only the valuation pressures as the results of a special rate of interest regime, but in addition there was some pull-forward of demand. … That is certainly one of the important thing trends to this point this earnings season.”
Moves within the Treasury market gave the impression to be impacting equities on Friday. The ten-year Treasury yield rose to three.13% for the primary time since 2018, coinciding with early declines for stocks, but eased back from that level later within the session.
Energy was a vibrant spot for the market, with EOG Resources jumping 5%. Oil prices rose again on Friday, which is a positive for energy stocks but is resulting in worries about slowing economic growth and better inflation.
On the earnings front, shares of Under Armour dropped greater than 22% after the apparel company missed estimates on the highest and bottom lines. That appeared to harm rival Nike, whose shares dropped about 4% and weighed on the Dow.
Insurance stock Cigna jumped nearly 5% after a better-than-expected quarterly report.
The losses Friday got here despite an April jobs report that showed a gain of 428,000 jobs, greater than the 400,000 expected by economists surveyed by Dow Jones.
One weak area of the report was the labor force participation rate, which was little modified month over month and stays 1.2 percentage points below its pre-pandemic level. Economists imagine that a recovery in participation could help stem the rise in wages and, by extension, inflation.
“If we’re to get a soft landing, we’re going to should see a recovery in participation at a reasonably rapid clip,” said Luke Bartholomew, senior economist at Abrdn.
The losses on Friday put the three major indexes at risk of ending lower for the week despite starting with three straight positive sessions.
— CNBC’s Michael Bloom contributed to this report.
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