- On Friday, Nasdaq 100 lost 1.5%, closing the month with 10% losses.
- Earning reports of Amazona and Apple disappointed the investors.
- Fears of rate hikes will keep weighing on the markets.
The Nasdaq 100 fell 1.5%, and the S&P 500 declined 1.3% as Amazon.com Inc. and Apple Inc. plunged. The Stoxx Europe 600 advanced, led by mining stocks. Tesla Inc.’s shares rose 4.8% after Elon Musk said he has no plans to sell more shares.
Stocks in the US fell on Friday due to a lack of earnings from the tech giants. Still, China’s promise of more stimulus restored confidence in the world’s second-largest economy and commodity demand driver.
“Amazon and Apple delivered disappointing guidance in earnings reports last night, wiping out yesterday’s gains,” noted Matt Maley, chief market strategist at Miller Tabak + Co. “It’s always good to see the market close with a big gain, but we know that the wild moves we’ve seen in recent weeks are symptoms of a sick market, not a healthy one.”
Fear of rate hikes hurt stocks’ rallies and fueled future profit risks. As a result, the Nasdaq 100 fell 10% in April, its lowest level since November 2008. However, even with notable disappointments, the busy reporting season helped soften the blow of a turbulent year. For example, Barclays strategists report that the S&P 500 earnings are up 4.3% year-over-year, with 86% of companies beating estimates.
The Federal Reserve and the ongoing Covid problems in China have investors assessing the risks of economic fluctuations and the impact of the Federal Reserve on US markets.
On Friday, a flattening yield curve was seen in the United States as traders priced in an aggressive Fed rate following higher US data costs than expected. However, consumer demand remained resilient in the last quarter despite a slowdown in economic growth.
Numbers underline the debate over the size of US activities. If the central bank is to prevent an economic collapse, it must tighten policy. The markets expect a half-point Fed rate hike next week, but investors are skeptical. In an attempt to reduce inflation, policymakers plan to raise rates aggressively for the first time since the 1980s.
Pascal Blanc, head of the Amundi Institute, wrote that the Fed is caught between wiping out inflation now and buying time to boost nominal growth at a potentially high cost. Unfortunately, they will likely lean towards the latter.
US 10-year bonds fell, taking Treasuries with them. The yield is 2.86%. In currency markets, the yen fell sharply, remaining near a 20-year low. The euro, pound and commodity-linked currencies rose while the dollar fell.
Nasdaq 100 technical analysis:
The Nasdaq 100 index fell sharply but found the support near 20-period SMA. However, the bearish trend will accelerate if the price break the 20-period SMA.
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