Wall Street ends the month of April in severe loss

Reuters Interview 5/2/22
May 2, 2022
Gold ends Friday higher, but books worst month since Sept. 2021 on strong dollar
May 3, 2022

Wall Street ends the month of April in severe loss

The New York Stock Exchange ended the week with a severe loss, annihilating the sharp rebound of the day before, and concluding the month of April in the red, weighed down by technology.

According to final results at the close, the Dow Jones index dropped 2.77% to 32,977.21 points. The tech-heavy Nasdaq fell 4.17% to 12,334.64 points and the S&P 500 fell 3.63% to 4,131.93 points.

Over the month, the Dow Jones is down almost 5%. The Nasdaq down more than 13% and is at its lowest level for a year. As for the S&P 500, with a fall of almost 9% over the month, it is posting its worst month since the start of the pandemic.

“A wide range of headwinds are weighing on markets, including an expected aggressive tightening cycle from the Fed, but also lockdowns in China, lingering inflationary pressures, rising bond yields and the recent rise in the US dollar,” stressed Schwab analysts.

“I don’t think it really has to do with macro-economic news, it’s rather the poor results of companies like Amazon or Apple that weigh on the rest of the market,” said Peter Cardillo of Spartan Capital.

Amazon, one of the largest capitalizations on the Nasdaq, lost a lot of weight (-14.05% to 2,485.63 dollars) while Jeff Bezos’ group posted its first quarterly deficit since 2015.

This is mainly due to a downgrade in the value of its investment in electric carmaker Rivian, but the e-commerce giant is also seeing its sales hurt by inflation and has reduced its forecast for the quarter. next.

Apple, which announced, after the close on Thursday, record sales of iPhones for this period of the year, but which fears that the confinements in China and the suspension of its activities in Russia will weigh on its future results, dropped 3.66% to $157.65.

Even Facebook (Meta), which ended Thursday with a jump of 17% after better-than-expected profits and good user performance, lost ground (-2.23%). At $193, the stock’s value remains a third below its peak at the end of 2021.

The relatively reassuring macro-economic news on consumer spending and confidence did not support the indices.

Consumer spending rose 1.1% in March, a rise partly due to inflation. Their income also increased, but to a lesser extent (+0.5%).

Consumer confidence improved significantly to 65.2 points (+9.8%) even if it remains at a very low level, according to the final estimate of the University of Michigan survey.

As for inflation, measured by the PCE index, the most watched by the American Central Bank (Fed), it rose by 6.6% over one year and 0.9% over one month. Excluding food and energy, the index slowed marginally (-0.1 percentage point), to 5.2%.

“Next week, the key will be the Fed’s monetary meeting and the release of unemployment figures for April,” said Peter Cardillo.

The markets are expecting an increase of half a percentage point (0.50%) in the central bank’s key interest rates, as suggested by its president Jerome Powell, who indicated that an increase in this order was “on the table”.

As a result, bond rates tightened significantly, climbing to 2.92% against 2.82% the day before.

Among the companies that announced their results on Friday, the American oil giant ExxonMobil (-2.24% to 85.25 dollars) was penalized despite a jump in its turnover and its quarterly profits. Analysts expected better and ExxonMobil also had to pass a large charge related to its withdrawal from Russia.

Another beneficiary of the war in Ukraine, which caused oil prices to soar, Chevron posted a net result that quadrupled over one year. Its title, however, dropped 3.16% to 156.67 dollars.

All S&P sectors ended in the red starting with consumer discretionary stocks (-5.92%) and real estate (-4.90%), followed by information technology (-4 .14%)