https://www.wsj.com/articles/global-stocks-markets-dow-update-04-22-2022-11650613003?mod=hp_lead_pos1
Worries about slowing corporate earnings and the Federal Reserve’s plans to rapidly raise interest rates dragged the Dow industrials to their worst day since 2020.
Investors this week parsed first-quarter financial results from a range of firms in search of clues about the health of the economy, the consumer outlook and companies’ ability to cope with inflation. Of the companies that have reported so far, about 80% have beat analyst expectations, according to FactSet, which has helped provide some stability to the U.S. stock market.
“Usually when the economy’s slowing down, or there is a perception it’ll slow down, there are obvious sectors to hide in. Those traditional sectors aren’t as safe from an earnings basis as they are historically because they still are going to have negative impacts from inflation,” said Tavis McCourt, institutional equity strategist at Raymond James.
The Dow Jones Industrial Average posted its worst one-day percentage change since October 2020, losing 981.36 points, or 2.8%, to close at 33811.40. The S&P 500 dropped 121.88 points, or 2.8%, to 4271.78, while the Nasdaq Composite fell 335.36 points, or 2.5%, to finish at 12839.29.
The recent rise in government-bond yields showed signs of steadying, with the yield on the 10-year Treasury note ending Friday at 2.905%, down two of the past three trading days. Yields staged a climb earlier Friday before reversing course. Bond yields rise when prices decline.
Healthcare stocks are often considered defensive, with money managers betting that consumers will pay medical bills before making discretionary purchases. The S&P 500’s healthcare sector fell 3.6%, its worst day since June 2020.
Concerns about inflation and the pace of monetary tightening by the Fed also remained at the forefront of investors’ minds this week. On Thursday, Fed Chairman Jerome Powell gave investors a clear signal that the central bank is ready to tighten monetary policy more quickly and indicated that it was likely to raise interest rates by a half-percentage point at its meeting in May.
A rate increase next month, following the Fed’s quarter percentage point increase in March, would mark the first time since 2006 that the central bank increased its policy rate at back-to-back meetings.
Mr. Powell’s comments injected fresh volatility into a stock market that has been whipsawed this year by the war in Ukraine, soaring inflation and rising Covid-19 cases in China.
“The market is finally internalizing and factoring in the reality that the Fed really means what it says and it’s not going to back down,” said Tim Courtney, chief investment officer of Exencial Wealth Advisors. “Somebody had a saying, and it’s pretty good: ‘You don’t fight the Fed when the Fed is fighting inflation.’”
In commodities, Brent crude, the international benchmark for oil, fell $1.68 a barrel, or 1.6%, to $106.65. It fell 4.5% this week.
Just want to add, there’s been some negative correlation between oil and the rest of the market, but today everything was bloody red.
