U.S. stocks dropped Friday and looked to end a volatile month lower, as a fresh set of mixed quarterly results from some major technology companies weighed on index futures.
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite each declined. Treasury yields climbed, and the benchmark 10-year yield rose above 2.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}. Shares of tech juggernaut Amazon slid after the company unexpectedly posted a quarterly loss and offered a weaker-than-expected current-quarter forecast. Apple’s stock also declined even after the iPhone-maker exceeded quarterly sales and profit estimates, though the company still cited ongoing supply chain constraints.
A day earlier earlier, the S&P 500 closed out Thursday’s session sharply higher, gaining 2.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, while the Nasdaq Composite rose by 3.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in its best day since March 16. But even with these marked gains, the S&P 500 was still on track to post its third monthly decline in four months.
Volatility has resurged in recent weeks amid concerns over whether tighter monetary policies from the Federal Reserve might derail the economy. And these fears compounded with lingering jitters over persistent inflation, geopolitical turmoil and an ongoing COVID outbreak in China. The S&P 500 was on track for an about 5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} drop in April, based on Thursday’s closing level.
“There’s a lot of rerating going on, whether it’s the rerating of equity valuations, the rerating of interest rate expectations, or the rerating of inflation expectations, against tightening happening at the Fed,” Todd Jablonski, Principal Global Asset Allocation chief investment officer, told Yahoo Finance Live. “The threats of a slower economy, the threats of inflation, and the threats of higher energy prices out of the conflict in Ukraine [are] all sort of coming together to really stymie investor confidence and sentiment.”
Plus, the data this week on corporate profits and the broad economy have shown signs of decelerating growth. Results from Big Tech companies including Alphabet and Twitter pointed to a slowdown in online ad businesses as companies pull back on marketing spending in the wake of moderating consumer demand. And throughout this earnings season, a plethora of companies across industries have pointed to elevated input and labor costs, as well as ongoing supply chain disruptions.
Against this backdrop, the U.S. economy contracted for the first time since the second quarter of 2020 at the start of this year, government data Thursday showed. The 1.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} annualized contraction in first-quarter U.S. GDP came as net trade, inventories and government investment each weighed on overall domestic output, and as consumer spending came in less robustly than expected.
However, the weaker-than-expected GDP print may also bolster the case for members of the Federal Reserve to exercise more caution as they prepare to raise interest rates further and begin rolling assets off the central bank’s balance sheet. These moves would raise borrowing costs and help bring down demand to stem inflation — but also risk tipping the economy into a deeper downturn if financial conditions tighten too quickly.
“There’s just so much concern around, do we go into a recession in the next 24 months because the Fed may just raise interest rates too much?” Ryan Payne, Payne Capital Management president, told Yahoo Finance Live. “I think that’s what’s really weighing on the markets, and more so than the fact that we have a war in Ukraine and these inflationary numbers have just been through the roof.”
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10:15 a.m. ET: Consumer sentiment revised down slightly for April, but still leaps compared to March: U. Michigan
The University of Michigan’s closely watched consumer sentiment index was revised down slightly in the final April print, though the index still held well above March’s levels.
The headline consumer sentiment index from the university’s Surveys of Consumers came in at 65.2 in April, according to the final monthly print released Friday. This compared to the 65.7 reported previously. In March, the consumer sentiment index had been at 59.4, or the lowest since 2011.
“The downward slide in confidence represents the impact of uncertainty, which began with the pandemic and was reinforced by cross-currents, including the negative impact of inflation and higher interest rates, and the positive impact of a persistently strong labor market and rising wages,” Richard Curtin, Surveys of Consumer chief economist, wrote in a press statement Friday. “The global economy has added even more uncertainties about prospects for the U.S. economy, including the growing involvement in the military support for Ukraine, and renewed supply line disruptions from the COVID crisis in China.”
“Moreover, consumers have lost confidence in economic policies, with fiscal actions increasingly hampered by partisanship in the run-up to the Congressional elections,” he added.
A subindex tracking consumers’ 1-year inflation expectations held steady at 5.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, which matched March’s level for the highest since 1981.
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9:31 a.m. ET: Stocks open sharply lower
Here were the main moves in markets as of 9:31 a.m. ET:
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S&P 500 (^GSPC): -48.99 (-1.14{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,238.51
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Dow (^DJI): -169.33 (-0.50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 33,747.06
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Nasdaq (^IXIC): -192.56 (-1.50{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 12,678.97
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Crude (CL=F): +$1.10 (+1.04{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $106.46 a barrel
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Gold (GC=F): +$18.60 (+0.98{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,909.90 per ounce
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10-year Treasury (^TNX): +4.9 bps to yield 2.9120{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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8:47 a.m. ET: Personal spending unexpectedly rose in March, even adjusted for inflation
Consumers continued to spend in March despite elevated inflation.
Personal spending rose 1.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} last month, the Bureau of Economic Analysis said in a report Friday. This was well above the 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} rate consensus economists were expecting, according to Bloomberg consensus data. And February’s spending rate was also revised higher to 0.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, from the 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} previously reported.
Real personal spending, which adjusts for inflation, posted a surprise increase of 0.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, whereas consensus economists were looking for a decline of 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in March. February’s real personal spending was also upwardly revised to show a 0.1{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase, from the 0.4{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} drop previously reported.
Personal income edged higher by 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in March following a 0.7{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} increase in February.
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8:32 a.m. ET: PCE inflation accelerates to 6.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} year-over-year rate in March
A closely watched measure of inflation ramped further in March, further underscoring the widespread inflationary pressures present across the U.S. economy.
The Bureau of Economic Analysis said Wednesday that personal consumption expenditures (PCE) increased at a 0.9{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} monthly rate in March compared to a 0.5{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} rate in February. On a year-over-year basis, PCE rose 6.6{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, also accelerating compared to the 6.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} clip during the prior month.
However, excluding volatile food and energy prices, core PCE inflation showed some signs of moderating. Core PCE rose 0.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996} in March to match February’s rate. And over last year, the core PCE increased by 5.2{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}, slowing from February’s downwardly revised rate of 5.3{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}.
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7:31 a.m. ET Friday: Stock futures hold overnight losses
Here’s where markets were trading Friday morning ahead of the opening bell:
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S&P 500 futures (ES=F): -38.25 points (-0.89{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,245.25
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Dow futures (YM=F): -153 points (-0.45{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 33,675.00
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Nasdaq futures (NQ=F): -160.75 points (-1.19{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 13,294.00
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Crude (CL=F): +$1.22 (+1.16{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $106.58 a barrel
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Gold (GC=F): +$25.70 (+1.36{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to $1,917.00 per ounce
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10-year Treasury (^TNX): +0.8 bps to yield 2.871{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}
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6:11 p.m. ET Thursday: Stock futures sink as Amazon, Apple shares decline
Here’s where stocks were trading Thursday evening:
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S&P 500 futures (ES=F): -35.75 points (-0.83{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 4,247.75
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Dow futures (YM=F): -62 points (-0.18{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 33,766.00
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Nasdaq futures (NQ=F): -219.5 points (-1.63{21df340e03e388cc75c411746d1a214f72c176b221768b7ada42b4d751988996}) to 13,235.25
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Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter.
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