NEW YORK: US stocks fell on Friday as disappointing forecasts from Amazon and Apple pushed the Nasdaq toward sharp monthly declines, with the biggest surge in monthly inflation since 2005 adding to investor worries.
Amazon.com Inc slumped 12.5% to a near two-year low as higher costs squeezed first-quarter results and the e-commerce giant said it expected to lose as much as $1 billion in operating income this quarter.
Apple Inc, the world’s most valuable company, slipped 1.0% after its glum outlook overshadowed record quarterly profit and sales.
Ten of the 11 major S&P 500 sectors declined on the last trading session of the month, with consumer discretionary stocks leading losses with a 3.6% drop.
Downbeat results and worries about aggressive monetary policy tightening by the Federal Reserve have hammered megacap technology and growth stocks this month.
The Nasdaq has lost 10% so far in April, putting it on course to match the double-digit monthly losses last seen during the height of the pandemic-led selloff in March 2020 and the global financial crisis in 2008.
“The problem here is the top 10 companies in the S&P 500 for example represent 30% of the index right now, so when you look at Amazon disappointing on earnings and it’s that much of the S&P 500, of course, it can hurt,” said Jeff Powell, Chief Investment Officer at Polaris Wealth Advisory Group.
“They are priced to perfection, and if they disappoint on earnings, people are going to sell out.” Data showed the personal consumption expenditures price index - the Fed’s favored measure of inflation - shot up 0.9% in March after climbing 0.5% in February.
The Fed is set to meet next week, with traders betting on a 50-basis-point rate hike to combat surging inflation.
Signs of aggressive monetary policy tightening, the Ukraine war and China’s COVID lockdowns have fueled fears of an economic slowdown. Data on Thursday showed the US economy unexpectedly contracted in the first quarter.
The benchmark S&P 500 is on track for the worst start to its year since 1942, falling 11.5% in the first four months.
At 11:38 a.m. ET, the Dow Jones Industrial Average was down 323.82 points, or 0.95%, at 33,592.57, the S&P 500 was down 65.26 points, or 1.52%, at 4,222.24, and the Nasdaq Composite was down 205.98 points, or 1.60%, at 12,665.55.
Exxon Mobil Corp slipped 0.5% as it took a $3.4 billion writedown due to its exit from Russia, while Chevron Corp dropped 1.7% as its first-quarter profit underwhelmed investors.
The earnings season overall has been better than expected so far. Nearly half of the S&P 500 companies have reported through Thursday and 81% of them have topped Wall Street’s expectations. Typically, only 66% beat estimates, according to Refinitiv data.
Declining issues outnumbered advancers for a 1.88-to-1 ratio on the NYSE and a 1.27-to-1 ratio on the Nasdaq. The S&P index recorded 2 new 52-week highs and 8 new lows, while the Nasdaq recorded 10 new highs and 134 new lows.
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