On Monday, stocks saw a sharp fall, resulting in a new 52-week low for the S&P 500. This comes as the market sell-off carried on and traders struggled to get some footing from the big market swings last week.
The Dow Jones Industrial Average fell 653 points or 1.99%. Meanwhile, S&P 500 went down 3.2% while Nasdaq Composite fell 4.29%.
The S&P 500 dipped below 4,000 (as low as 3,975.48) on the day, reaching its lowest level since March 2021. Meanwhile, all sectors, apart from consumer staples, went into the red.
However, even with the losses, the 10-year Treasury yield benchmark reached its highest since late 2018 as it traded over 3%.
“This is significant repricing, this is significant dislocation and this is all being spurred and driven by Federal Reserve policy,” according to Jeff Kilburg of Sanctuary Wealth. “The only way I see us finding the bottom in equities short-term, the only way I see markets healing is if the Fed has the ability with the tools in their toolbox to calm down interest rates. The 10-year note needs to go back under 3%.”
S&P 500, Dow, Nasdaq Experience as They Come Off a Rough Week
The climbing traits carried on to crush tech companies, including Meta Platforms and Alphabet, which lost over 3.7% and 2.8%, respectively. Amazon, Apple, and Netflix all went down almost 5%, 3%, and 4%, respectively, while both Nvidia and Tesla fell over 9%.
The high rates and a possible recession as inflation climbs also affected other market areas. Consumer stocks and industrials both suffered. Bank stocks also came under pressure, with the Bank of America going down by over 2.8%.
In Dow, Boeing came out as the biggest loser, falling over 10%. It is followed by Chevron, which fell 6.7%, as U.S. oil futures continued to go down. Despite the broader sell-off, some companies such as Amgen, Walmart, Home Depot, and 3M carried on to be bright spots in the market.
“We expect markets to remain volatile, with risks skewed to the downside as stagflation risks continue to increase,” said Barclays’ Maneesh Deshpande. “While we cannot discount sharp bear market rallies, we think the upside is limited.”
Wall Street is coming about a rough week while investors weigh their prospects of interest rate increase versus the possibility of slower economic growth.
Last week, S&P 500 and Dow fell 0.21% and 0.24%, respectively, while Nasdaq Composite went down 1.54%. It marked the sixth straight losing week experience by Dow while the fifth straight for the other two indexes.
The cumulative moves for the week are not unusual, but some of the day-to-day swings were astonishing. On Wednesday, the Dow experienced its best day since 2020, but it then lost all those gains and more the next day.
The short-lived rally on Wednesday follows Federal Reserve Chair Jerome Powell saying that the central bank was not thinking about a 75-basis-point rate increase at upcoming meetings. Stocks rallied while bond yields fell after this comment, but its course reversed on Thursday.
On Friday, Billionaire hedge fund manager David Tepper told Scott Wapner of CNBC that Powell's statement constituted an “unforced error” that added to market volatility.
Also, chart analysts say they are also seeing indications of a prolonged market downturn emerging.
“Our thinking is that stocks are likely to continue lower because we have not yet seen enough technical evidence to suggest a bottom process has started,” said JC O’Hara of MKM Partners. “Technical indicators are not oversold enough. The volume profile has shown little if any signs of real capitulation.”
Meanwhile, on the earnings front, Plantir got 21% on weak revenue guidance while BiNTECH catered 5.8% after a strong quarter. First-quarter earnings season has begun to slow down. Despite this, multiple notable reports, including those of Walt Disney and Occidental Petroleum, are expected to come out later in the week.