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The S&P 500 drops 1% on Friday, putting it on track for a third consecutive losing week

Stocks fell on Friday as the S&P 500 headed for its third consecutive week of declines amid loaded earnings and rising bond yields.

The Dow Jones Industrial Average fell 631 points, or 1.8%. The S&P 500 was down 1.8% and the Nasdaq Composite was down 1.5%.

Companies reporting disappointing quarterly results led the market lower on Friday. HCA Healthcare fell 18% to become the worst-performing stock in the S&P 500. The drop came as the company posted weak earnings and revenue forecasts for the full year. The S&P 500 healthcare sector also lagged the most among the 11 groups, down 2.8%.

Verizon shares fell 6% after the company reported a loss of 36,000 monthly phone subscribers in the first quarter.

Gap shares plunged 13% after the company announced that the CEO of its Old Navy division, Nancy Green, was leaving the company this week. Gap also cut its outlook for net sales growth in fiscal 2022.

Friday’s action followed a dramatic reversal on Thursday after a speech by Federal Reserve Chairman Jerome Powell that saw major averages erase earlier gains and close lower. The Dow Jones ended the day down more than 300 points, while the S&P 500 fell nearly 1.5%. The tech-heavy Nasdaq Composite took the brunt of the sell-off on soaring rates, slipping 2%.

“Stagflation concerns are resurfacing following real-time signs of a tight labor market and a declining business climate, coupled with a further rebound in 10-year Treasury yields – and all peppered with a deluge of earnings releases,” Chris Hussey, managing director at Goldman Sachs, said in a note.

For this week, the Dow is down 0.07% and on track for its third consecutive losing week. The S&P is down 0.8% on the week and trying to snap a two-week losing streak. The Nasdaq is down 1.6% since the start of the week, on track to post its third consecutive negative week.

As the earnings season continues, traders are still digesting Powell’s comments about the possibility of a bigger than usual rate hike next month.

“Although April saw the largest average price increase since World War II and the second-highest frequency of increases, the outlook for more aggressive rate-tightening by the Federal Reserve in response to a inflation not seen since the early 1980s continues to weigh on stock prices and investors’ nerves,” Sam Stovall, chief investment strategist at CFRA Research, told CNBC.

Powell told an International Monetary Fund panel moderated by CNBC’s Sara Eisen that getting inflation under control is “absolutely critical” and that a 50 basis point hike is on the table for May.

After reversing higher on Powell’s comments, the 10-year Treasury yield closed at 2.92% on Thursday. The 10-year yield was even higher on Friday, rising to 2.94%, near a three-year high.

“Central bank warmongering and rising bond yields are moving markets again,” Ross Mayfield, investment strategy analyst at Baird, told CNBC. “Nothing particularly new, but yet another reminder of the monumental change underway on the political front. Powell noted that there could be benefits to accelerating the upsides and being aggressive early on, it prepares them for the potential downside later. if the economy stumbles.”

The S&P 500 drops 1% on Friday, putting it on track for a third consecutive losing week

Source link The S&P 500 drops 1% on Friday, putting it on track for a third consecutive losing week

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