As shares of what were once market darlings during the height of the pandemic headed for their biggest monthly slump since the global financial crisis, technology stocks extended their losses on Friday.
Amazon's buildout during the pandemic proved to be too much despite diminishing consumer demand, leading the decline with a 14% drop, the worst since 2006. The Nasdaq 100 fell 4.5%, extending its monthly losses to 13%, the highest since October 2008. Meanwhile, the S&P was 3.6% with every major sector in the red.
Even with the noteworthy setbacks, a busy earnings season has mostly managed to moderate losses amid a volatile year. However, worries of the federal reserve tightening monetary policy, combined with COVID-19 lockdowns in China and Russia's war in Ukraine, has dampened optimism, particularly for frothy growth stocks with uncertain future profitability. Apple Inc.'s stock fell 3.7% after the company issued a supply warning.
According to Jonathan Golub of Credit Suisse, tech companies are expected to see a profit contraction of 1.2% in the first quarter, compared to a market-wide gain of 12%. According to his data, huge tech enterprises have outperformed the remainder by 2.3% VS 8.6% for the rest.
Investors are assessing risks from a range of macro headwinds despite economic data that provides a good picture of business demand, which has resulted in losses.
The yield curve in the United States flattened on Friday as traders priced in a more aggressive Federal Reserve in the wake of data showing that US expenditure was greater than expected. That came after a report on Thursday that showed strong consumer demand despite the economy contracting unexpectedly last quarter.
The data highlight the argument over how much leeway the US Federal Reserve has to tighten policy before the economy collapses. Traders are now putting in a near-equal chance that policymakers will boost interest rates by 75 basis points in June, following a half-point hike next week.
Treasury yields fell, bringing the 10-year yield to 2.90%. The yen resumed its decline in foreign exchange markets, remaining near 20-year lows. While the dollar fell, the euro, pound, and commodity-linked currencies rose. Oil prices dropped, wiping out earlier gains.