Stocks extend losses as investors weigh Powell’s hawkish comments, more corporate earnings

US stocks fell sharply on Friday as investors weighed down a batch of corporate earnings and braced for more aggressive rate hikes from the Federal Reserve in the coming months.

The S&P 500 fell 1.9%, while the Dow Jones Industrial Average fell 580 points, putting both major indexes at five-week lows. The Nasdaq Technology Weight Composite Index is down 1.9%. Meanwhile, the 10-year US Treasury yield remained at 2.9%, the highest level since December 2018.

The losses come on the heels of Federal Reserve Chair Jerome Powell’s comments at a session hosted by the International Monetary Fund on Thursday, noting that a 50 basis point interest rate increase was “on the table” for May, when the US central bank holds its next policy-setting meeting. The Fed chair also reiterated that policy makers are committed to “front-loading” anti-inflation efforts.

“Today’s market action reflects the strength of Jerome Powell’s comments yesterday, that the Fed is determined to de-inflate rising inflation and effectively acknowledges that the market can expect a 50-point rise,” said Quincy Crosby, chief equity strategist at LBL, in comments on Friday. basis in May. .

Speaking to European Central Bank President Christine Lagarde and other officials on Thursday, Powell said the Fed is committed to bringing inflation back to 2%, referring to the Fed’s goal of an annual rate increase.

“We are definitely ready to raise rates by 50 basis points at the May meeting,” Capital2Market President Keith Bliss Said on Yahoo Finance Live“The market is very good at dictating, if not indicating, where this is going.”

With the headline consumer price index at a four-decade high, the US Federal Reserve recently indicated that a strict monetary tightening was underway to curb high price levels despite experts warning that moving too quickly could lead to economic deflation.

“The big question is whether earnings can really sustain that kind of macro backdrop to slower growth and Fed policy,” Deepak Puri, investment director for Deutsche Wealth Management at Deutsche Bank. Said on Yahoo Finance Live earlier this week. “Some companies seem to be able to – historically this has been the case. The different thing this time around is really the trifecta, which are higher capital costs, quantitative tightening, plus a lack of … a significant fiscal stimulus.”

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Despite concerns from Wall Street about upcoming policy moves and the risks for traders, a reading of the Fed’s recently published Beige Book indicates that Main Street sentiment remains generally positive.

Strategists at LPL Research said the Beige Book gauge may provide a more accurate picture of the economic outlook than current consumer sentiment, which has been weak in the face of high inflation. Despite the economic slowdown in the first quarter, data out of Washington came in better than expectations agreed in recent weeks.

“Given the latest Federal Reserve’s Big Book, domestic US companies remain resilient despite rising uncertainty,” said Barry Gilbert, LPL’s asset allocation strategist. “Inflation, COVID, and conflict in Ukraine will keep uncertainty high in the near term, but if we can overcome these challenges, we believe there are strong prospects for a growth recovery in the second half of the year.”

Elsewhere in the markets, key reports released on Friday included quarterly results from American Express (AXP), which is down 1.7% in day trading despite reporting a profit win, and Verizon (VZ), down 5.8% after the telecom giant said it lost 36,000 monthly phone subscribers during the first quarter.

“Expectations of rate hikes and the potential for quantitative tightening have worsened, there have been a series of earnings disappointments,” Crosby said in his note.

Investors keep watching Snap Inc. (Explode, Explode) after the company projected a strong user growth outlook on Thursday but warned of supply chain disruptions and inflation that could continue to hurt ad demand. Snap shares were down 2.6% on Friday afternoon.

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10:03AM ET: US business activity slows in April

Business activity fell across the US in Aprilwith inflationary pressures that affected the production of the services sector, as the rise in prices affected spending.

S&P Global’s Composite PMI, which is a measure of overall economic health, fell to a reading of 55.1 this month from 57.7 in March. Economists polled by Bloomberg expected a reading of 57.9. Any reading above 50 indicates growth in the private sector.

“Many companies continue to report pent-up demand tailwinds from the pandemic, but companies are also facing increasing challenges from rising inflation and cost-of-living pressure, as well as ongoing supply chain delays and labor restrictions,” said Chris Williamson, chief business economist at S&P Global. In a statement.

“These headwinds, combined with growing concerns about the economic outlook and monetary tightening, mean that business confidence about the outlook fell sharply in April. However, with the overall pace of economic growth and employment remaining relatively strong, for now, the focus is likely to remain From a policy perspective, he is consistent on the need to rein in record-high inflationary pressures indicated by the survey.”

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9:30 a.m. ET: Stocks extend losses after Powell’s interest rate comments scare investors

This is where the key benchmarks opened at the start of Friday’s trading session:

• Standard & Poor’s 500 (^ Salafist Group for Preaching and Combat): -15.81 (-0.36%) to 4377.85

• dow (^ DJI): -229.65 (-0.66%) to 34563.11

• Nasdaq (^ ninth): +0.85 (+0.01%) to 13175.50

• raw (CL = F.):- $2.01 (-1.94%) to $101.78 per barrel

• He went (GC = F.): – 13.10 USD (-0.67%) to 1935.10 USD per ounce

• Treasury for 10 years (^ degeneration): +1.1 basis points to produce 2.9280%

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7:00 AM ET: Futures edge lower as S&P 500 prepares for another losing week

Here are the main moves in futures trading before the opening bell on Friday:

• S&P 500 futures contracts (ES = F.): -12.75 (-0.29%) to 4377.75

• Dow futures contractsYM = F.): -95.00 (-0.27%) to 34614.00

• Nasdaq futures contractsNQ = F.): -39.75 (-0.29%) to 13688.50

• raw (CL = F.):- $1.48 (-1.43%) to $102.31 per barrel

• He went (GC = F.): – 12.10 USD (-0.62%) to 1936.10 USD per ounce

• Treasury for 10 years (^ degeneration): 0.00 basis points (0.00%) to produce 2.9170%

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6:53PM ET Thursday: Stock futures fell silent after Powell’s hawkish comments, sending indexes lower

Here is where the shares traded ahead of Thursday’s evening session:

• S&P 500 futures contracts (ES = F.): -1.50 (-0.03%) to 4,389

• Dow futures contractsYM = F.): -3.00 (-0.01%) to 34706

• Nasdaq futures contractsNQ = F.): -4.75 (-0.03%) to 13.723.50

• raw (CL = F.):- $0.03 (-0.3%) to $103.76 per barrel

• He went (GC = F.): +$4.60 (+0.24%) to $1,952.80 per ounce

• Treasury for 10 years (^ degeneration): +0.077 basis points (+2.71%) to produce 2.9170%

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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter Tweet embed

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