The S&P 500 benchmark fell 3.6% and ended April with losses of 8.8%, its worst monthly slide since March 2020. The Dow fell 2.8%. The Nasdaq, which weighed heavily on tech stocks, suffered the bulk of the loss this month, closing in April with a 13.3% loss, its biggest monthly drop since the 2008 financial crisis. The main indicators shifted between falls and rally throughout the week as the last round of corporate profits hit the market in force. Investors are reviewing a particularly large batch of financial results from big tech companies, industry companies and retailers. “When you start to hear companies say that maybe demand is down, worries about a deeper economic slowdown are gaining momentum and that’s where we are,” said Quincy Krosby, chief equities strategist at LPL Financial. Traders also continue to worry about the hard drug that the Federal Reserve is using in its fight against inflation: higher interest rates. The central bank is expected to announce another round of interest rate hikes next week, a move that will further increase borrowing costs in all sectors for those who buy cars, use credit cards and take out mortgages to buy homes. “Rising cost pressures and uncertain prospects from the big tech giants have upset investors over the weekend and investors are unlikely to feel comfortable soon with the Fed widely expected to give a 50 basis point increase along with an aggressive message on next week, “said Charlie Ripley, senior investment strategist at Allianz Investment Management. The S&P 500 fell 155.57 points to 4,131.93 on Friday. The benchmark is now down 13.3% for the year. The Dow fell 939.18 points to 32,977.21 points. The Nasdaq fell 536.89 points to 12,334.64. It has decreased by 21.2% so far this year. Shares of smaller companies also had a tough day. Russell 2000 fell 53.84 points, or 2.8%, to 1,864.10 points. Big Tech leads the market lower all month, as merchants avoid the high-flying industry. Technology had made huge gains during the pandemic and is now beginning to look overpriced, especially as interest rates soar as the Fed intensifies its fight against inflation. Prices for everything from food to gas have risen as the economy recovers from the pandemic and there has been a major disconnect between higher demand and delayed supplies. Russia’s invasion of Ukraine has fueled inflation concerns, leading to rising prices for oil, gas, wheat and corn. The Commerce Department said on Friday that the US Federal Reserve’s inflation rate rose 6.6% in March from a year earlier, the 12-month high in four decades, and that rising prices were pushing them up. Household budgets and the health of the economy. The latest report on rising US inflation follows a report by Eurostat, which shows that inflation hit a record high of 7.5% in April for the 19 countries that use the euro. Bond yields rose after the hot inflation readings. The yield on the 10-year bond increased to 2.92% from 2.85%. The persistent rise in inflation has prompted central banks to raise interest rates in order to mitigate the impact on businesses and consumers. Much of Wall Street’s concern in April focused on how quickly the Fed would raise its key interest rate and whether a series of aggressive increases would slow economic growth. The Fed chairman has indicated that the central bank may raise short-term interest rates by twice the usual amount in the coming meetings, starting next week. It has already raised its key overnight interest rate, the first such increase since 2018, and Wall Street expects several large increases in the coming months. Investors spent much of April transferring money from Big Tech companies, whose stock values benefit from low interest rates, to areas considered less risky. The S&P 500 Consumer Goods segment, which includes many home and personal goods manufacturers, was the only industry in the benchmark earnings index in April. Other secure gaming industries, such as utilities, have outperformed the wider market, while technology and communications stocks are among the biggest losers.
