Stocks took steep losses Friday, closing a brutal month with a deep selloff driven largely by falling shares of technology companies.
The Dow Jones Industrial Average closed with a loss of more than 930 points, a decline of 2.8 percent, on the final trading day of April. The Dow ended April down more than 6 percent from the start of the month and nearly 10 percent from the beginning of 2022.
The tech-heavy Nasdaq composite took much heavier losses, dropping 4.2 percent on the day and more than 14 percent since the start of April — its worst monthly loss since 2008. The composite is also in what investors consider a bear market after dropping more than 20 percent from a record high set last year.
The S&P 500 closed with a loss of 3.6 percent and was down roughly 10 percent from the start of the month.
Stocks have fallen steadily through most of the year as a combination of high inflation, economic blowback from the war in Ukraine, stubborn pandemic-related supply challenges and the Federal Reserve’s ongoing interest rate hikes rattled investors. Major technology companies, which powered much of the past year’s sharp rise in the stock market, have been among the biggest losers in the current selloff.
“Today’s market action is another instance where big tech bellwethers are dragging down the rest of the market,” said Charlie Ripley, senior investment strategist for Allianz Investment Management.
“Rising cost pressures and uncertain outlooks from the largest technology names have investors agitated going into the weekend and investors are not likely to be comfortable any time soon.”
Amazon shares fell 14 percent, the company’s worst daily stock decline since 2006, after the e-commerce giant reported a drop in revenue. Shares of Apple, Google parent company Alphabet, Microsoft, Netflix, and PayPal all fell more than 3 percent Friday.
The stock market turbulence is likely to stretch into the start of next week before a pivotal three-day stretch of economic news.
The Federal Reserve’s interest-rate-setting committee is set to meet in Washington, D.C., next week and is expected to announce a 0.5 percentage point interest rate hike. Investors will be paying close attention to Fed Chair Jerome Powell’s press conference following the Wednesday hike for clues about the pace and size of future rate hikes.
Higher interest rates often cut into corporate profits as companies pay more for loans, denting future stock dividends. Rising borrowing costs are also likely to slow the economy, including the intense consumer demand behind much of last year’s stock market rally.
The Fed is aiming to raise interest rates fast enough to cool off the overheated economy without derailing a strong job market or causing a recession. But economists have become increasingly concerned the central bank may be unable to curb rising prices without raising rates high enough to stall the economy.
The personal consumption expenditures price index — the Federal Reserve’s preferred gauge of inflation — rose 6.6 percent over the 12 months ending in March, up from a 6.3 percent annual inflation rate in February, the Bureau of Economic Analysis reported Friday. Annual inflation without food or energy prices, which are more volatile, fell slightly to 5.2 percent in March, down from 5.2 percent in February.
“A decidedly more hawkish Fed, coupled with still intractable supply chain issues, and rising energy prices may make the hope of a ‘soft landing’ from the Fed more elusive,” said Quincy Krosby, chief equity strategist for LPL Financial.