Wall Street on Friday tumbled more than 2.5 percent, ensuring the three main benchmarks ended in negative territory for the week, as surprise earnings news and increased certainty around aggressive near-term interest rate rises took their toll on investors.
It was the third straight week of losses for the S&P 500 and the NASDAQ, while the Dow Jones posted its fourth weekly decline in a row.
For the Dow, its 2.82 percent drop on Friday was its biggest one-day fall since October 2020.
Exaggerated trading swings have recently become more common, as traders adjust to new data points from earnings, as well as when rates will rise again.
For the NASDAQ, Friday was the eighth session in April, out of 15 trading days this month, where the index either rose or fell by more than 2 percent.
“It’s not very common, over the course of my time doing this job, for the market to move 2 percent in either direction and to think: ‘There’s not too much to read into that,’” Oanda Corp senior market analyst Craig Erlam said.
“That’s not normal, but that’s just how things have been for such a long time now,” he said.
Worries about risks from interest rate hikes continued to reverberate after US Federal Reserve Chairman Jerome Powell’s hawkish pivot on Thursday, where he backed moving more quickly to combat inflation and said that a 50 basis-point increase would be “on the table” when the Fed meets next month.
The idea of “front-end loading” the US central bank’s retreat from super-easy monetary policy, which Powell articulated support for on Thursday, has also forced traders to re-evaluate how aggressive subsequent rate rises would be.
The CBOE Volatility index, also known as Wall Street’s fear gauge, jumped on Friday, ending at its highest level since the middle of last month.
Meanwhile, the latest earnings forecasts to jolt investors came from healthcare, with HCA Healthcare and Intuitive Surgical Inc the worst performers on the S&P 500.
HCA slumped 21.8 percent after reporting a downbeat profit view, while other hospital operators felt the contagion: Tenet Healthcare, Community Health Systems and Universal Health Services all tumbled between 14 and 17.9 percent.
Surgical robot maker Intuitive Surgical dropped 14.3 percent after warning of weaker demand from hospitals due to tighter finances.
All 11 major S&P 500 sectors were down, although the 3.6 percent slip by healthcare was outdone by materials, which was off 3.7 percent.
Materials was weighed down by Nucor Corp — down 8.3 percent after hitting a record high after posting earnings on Thursday — and Freeport-McMoRan Inc, which slipped 6.8 percent as investors fretted over how interest rate hikes would affect copper miners.
The Dow Jones Industrial Average fell 981.36 points, or 2.82 percent, to 33,811.4, the S&P 500 lost 121.88 points, or 2.77 percent, to 4,271.78 and the NASDAQ Composite dropped 335.36 points, or 2.55 percent, to 12,839.29.
For the week, the Dow dipped 1.86 percent, the S&P dropped 2.75 percent, and the NASDAQ declined 3.83 percent.
The prospect of a more hawkish Fed has led to a rocky start to the year for equities, with Friday’s sell-off taking declines on the S&P and Dow since the start of the year beyond 10 percent.
The trend is more pronounced in tech and growth shares, whose valuations are more vulnerable to rising bond yields. The NASDAQ is down 17.9 percent so far this year.
The volume on US exchanges was 11.66 billion shares, compared with the 11.67 billion average for the full session over the past 20 trading days.
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