DJIA: 33,811.40, down 981.36
S&P 500: 4,271.78, down 121.88
Nasdaq: 12,839.29, down 335.36
Stocks slide on rate hike jitters
U.S. stocks finished near session lows on Friday amid anxiety over looming central bank interest rate hikes. The Dow lost 981 points in its worst day since October 2020, weathering a fourth consecutive weekly decline (-1.9%). The S&P 500 fell 2.8%, while the Nasdaq Composite retreated 2.6%, dragging their five-day slide to 2.8% and 3.8%, respectively. Both benchmarks suffered their third straight weekly drawdown, their longest such losing streak since January. The mega-cap Nasdaq 100’s 2.7% drop left the index nearly 10% lower month-to-date. The CBOE Volatility Index (VIX) climbed to a one-month high, while a gauge of the U.S. dollar soared 0.6% to a July 2020 peak.
Yesterday, Federal Reserve (Fed) Chair Jerome Powell confirmed that a 0.50% rate hike was “on the table” for the May 4 policy decision as officials prioritized the fight against inflation. Traders moved to price in a larger-than-normal 0.50% rate increase at each of the Fed’s upcoming meetings in May, June, July, and September. Shorter-dated Treasuries extended their rout, with the more Fed-sensitive two-year note yield ascending to 2.69%, capping a 24-basis point (0.24%) weekly spike. On the data front, flash readings from S&P Global revealed the U.S. manufacturing and services sectors remained in expansionary territory in April, with growth in the former unexpectedly accelerating.
All 11 S&P 500 sectors closed in negative territory with Health Care among the worst performers. HCA Healthcare Inc. and Intuitive Surgical Inc. dropped 21.8% and 14.3%, respectively on downbeat results. Elsewhere, Verizon Communications Inc. shed 5.6% after slashing its full-year revenue forecast. Kimberly-Clark Corp. bucked the downtrend, jumping 8.1% following a boost to its 2022 sales projections.
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