Dow sinks more than 900 points in its worst day since 2020, falls for the fourth consecutive week

Stocks slumped on Friday, with the Dow Jones industrial average suffering its worst one-day loss since the death throes of the pandemic, as the latest round of corporate earnings and the prospect of a rate hike fueled a selloff.

The Dow fell 981.36 points, or 2.8%, to 33,811.40. The S&P 500 fell 2.8% to 4,271.78, its worst day since March. The Nasdaq Composite fell 2.6% to 12,839.29. Friday’s loss was the biggest for the Dow since Oct. 28, 2020.

UnitedHealth fell more than 3%, cutting more than 100 points from the Dow Jones. Caterpillar also took nearly 100 points off the 30-stock average, falling 6.6% on the day. Goldman Sachs, Home Depot and Visa were also big contributors to the downside.

Those losses sent the Dow Jones down 1.9% for the week, its fourth consecutive weekly decline and ninth losing week in the last 11. The S&P 500 posted a 2.8% weekly loss, marking its third weekly decline. consecutive. The Nasdaq was the laggard this week, shedding 3.8%.

Companies that reported disappointing quarterly results led the market decline on Friday. HCA Healthcare fell 21.8% and was the worst-performing stock in the S&P 500. The drop came as the company posted weak full-year earnings and revenue guidance.

“Investors seem to be moving away from TINA’s ‘no alternative’ narrative lately when it comes to stocks,” said Brian Price, director of investment management at Commonwealth Financial Network. This is the second week in a row of significant outflows from equity mutual funds and days like today are unlikely to change sentiment going forward.”

That pushed other names in the health sector down. Universal Health Services and Intuitive Surgical Services each lost 14.3%. DaVita fell almost 9.2% and DexCom fell 6.7%.

Verizon shares fell 5.6% after the company reported a loss of 36,000 monthly phone subscribers in the first quarter.

Gap shares plunged 18% after the company announced that the CEO of its Old Navy division, Nancy Green, would leave the business this week. Gap also cut its outlook for net sales growth in fiscal 2022.

“This is all to do with Powell’s comments, but the warning comments about future sales growth in so many earnings announcements are underscoring the essential point: Fighting inflation will inflict some pain,” said Jeanette Garretty. , chief economist at Robertson Stephens Wealth Management.

Friday’s action followed a dramatic reversal on Thursday after a speech by Federal Reserve Chairman Jerome Powell affected market sentiment. Powell told an International Monetary Fund panel that reining in inflation is “absolutely essential” and that a 50 basis point hike is on the table for May.

“The aggressive attitude of central banks and the recovery of bond yields are moving the markets again,” Ross Mayfield, an investment strategies analyst at Baird, told CNBC. “Nothing especially new, but a new reminder of the monumental change that is happening on the policy front. Powell noted that it may be beneficial to bring increases forward and be aggressive early on, this sets them up for the potential of cutting later if the economy stumbles.”

Rates soared Thursday on Powell’s comments. On Friday, the benchmark 10-year Treasury yield fell slightly to around 2.9%.

Asked about the potential for a 75 basis point hike, Loretta Mester, president of the Federal Reserve Bank of Cleveland, told CNBC’s “Closing Bell” on Friday that “we don’t need to go there” and said she would support a increase of 50 basis points. hiking point in May.

“Despite April recording the strongest average price increase since World War II and the second-highest frequency of advance, prospects for a more aggressive rate tightening by the Federal Reserve in response to an inflation rate unseen since the early 1980s continues to weigh on stock prices and investor nerves,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC.

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