(Bloomberg) — Technology stocks extended losses on Friday, as shares of once-market darlings at the height of the pandemic headed for their worst monthly decline since the global financial crisis.
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Amazon.com Inc. led the decline with a 14% drop, the worst since 2006, as the e-commerce giant’s expansion during the pandemic proved too much amid falling consumer demand. The Nasdaq 100 fell 4.5%, bringing its losses to 13% for the month, the most since October 2008. The S&P 500, meanwhile, was down 3.6%, with all major sectors in numbers. reds.
A busy earnings season has gone a long way to temper losses during a turbulent year, even with notable disappointments. However, fears of tightening monetary policy at the Fed, combined with the Covid-19 lockdowns in China and Russia’s war in Ukraine, have weighed on sentiment, especially for frothy growth stocks that have future gains in risk. Shares of Apple Inc. also fell 3.7% after warning of supply constraints.
“Key tech giants have been keeping stock averages from falling further than they already have, so it looks like April will end on a sour note,” wrote Matt Maley, chief market strategist at Miller Tabak + Co. , pointing to the reference point. gains on Thursday thanks to the results of Meta Platforms Inc. “But experience tells us that these kinds of wild intraday moves (and wild daily moves) that we have experienced on many days in recent weeks are signs of an unhealthy market.”
Technology companies will show a 1.2% profit contraction in the first quarter, compared with 12% growth for the rest of the market, according to Jonathan Golub of Credit Suisse. Big tech companies have also outperformed profits by 2.3% versus 8.6% for the rest, their data shows.
The losses come as investors assess the risks of a series of macroeconomic headwinds amid economic data that paints a positive picture of business demand.
The US yield curve flattened on Friday as traders priced in a more aggressive Fed after data showed US spending was higher than expected. That followed a report on Thursday that pointed to robust consumer demand despite a surprise contraction in economic growth last quarter.
The figures underscore the debate over how much room the US central bank has to tighten policy before the economy falls apart. Traders are now pricing in an almost equal chance that policymakers will raise interest rates by 75 basis points in June, after a half-point move is expected at their meeting next week.
“What’s happening here is that we’re moving away from this period where a rising tide is lifting all the boats,” Emily Roland, co-head of investment strategies at John Hancock Investment Management, said on Bloomberg TV. “We no longer have an ultra accommodative Fed policy. We no longer have fiscal stimulus or speculative risk taking. And now we’re seeing what the fundamentals really look like for tech companies, and we’re seeing a big divergence between some of the winners and some of the losers.”
Treasuries fell, taking the 10-year US bond yield to 2.90%. In currency markets, the yen tumbled while hovering near 20-year lows. The euro, pound and commodity-linked currencies all gained while the dollar fell. Oil fell, erasing earlier gains.
Some of the main movements in the markets:
The S&P 500 fell 3.6% at 4:01 p.m. New York time
The Nasdaq 100 fell 4.5%
The Dow Jones Industrial Average fell 2.8%
The MSCI World Index fell 1.9%
The Bloomberg Dollar Spot Index fell 0.3%
The euro rose 0.5% to $1.0547
Sterling was up 0.9% at $1.2574.
The Japanese yen rose 0.8% to 129.78 per dollar.
The 10-year Treasury bond yield rose eight basis points to 2.91%.
Germany’s 10-year yield advanced four basis points to 0.94%
Britain’s 10-year yield advanced three basis points to 1.91%
West Texas Intermediate crude fell 1% to $104.35 a barrel.
Gold futures rose 0.4% to $1,898 an ounce.
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