3 min read.Updated: 25 Apr 2022, 09:27 PM ISTAgencies
All the major S&P sectors fell, with energy stocks tumbling 4.1% as Brent crude prices dropped almost 5% toward $100 a barrel
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US stocks declined ahead of a busy week for Big Tech earnings while those in Europe and Asia were also lower as China's Covid-19 outbreak continued to compound fears sparked by faster US interest rate hikes denting economic growth. Bonds rose.
All the major S&P sectors fell, with energy stocks tumbling 4.1% as Brent crude prices dropped almost 5% toward $100 a barrel.
Other economy-sensitive sectors such as materials, financials and industrials also took a hit, falling close to 2%.
“This week may easily be a fork in the road of equities," JC O’Hara, chief market technician at MKM Partners, wrote in a note. “We have nearly a third of the S&P 500 and half of the Dow Jones set to report. Bottom-up drivers will either confirm or reject what the challenging macro backdrop has given us over the last three weeks."
"China lockdowns are getting worse. It slows general economic growth and also creates supply chain issues that will continue to make inflation bad and lower earnings growth in the United States," said Christopher Grisanti, chief equity strategist at MAI Capital Management in New York.
"I don't think we've seen the bottom yet. We haven't had that big sell off yet where we have huge volumes."
The CBOE Volatility index, known as Wall Street's fear gauge, hit its highest level since mid-March at 30.1 points.
Investors were also on edge at the start of a week that will see megacap companies like Google-parent Alphabet Inc, Microsoft Corp, Amazon.com Inc and Apple Inc publish quarterly results.
Bleak results from pandemic darling Netflix along with surging bond yields pummeled high-growth stocks last week, bringing year-to-date losses in the tech-heavy Nasdaq to 18.4%. Meanwhile, the benchmark S&P 500 is down 11.1% so far this year.
Traders are pricing in big moves by the Federal Reserve this year to control inflation after a series of hawkish remarks from policymakers.
Fed Chair Jerome Powell last week gave a "go" sign to a half-point rate hike in May and signaled he would be open to "front-end loading" the US central bank's retreat from super-easy monetary policy.
Money markets expect the Fed to raise interest rates by a half point at the central bank's next two meetings.
“We continue to believe that U.S./global equities will not bottom until markets stop discounting ever more aggressive Fed rate policy," wrote Nicholas Colas, co-founder of DataTrek Research. “It’s not that the current news flow is bad. The problem is that the range of potential economic outcomes is too wide to predict future corporate earnings with any certainty."
Dow, Nasdaq, S&P 500 down
At 10:03 a.m. ET, the Dow Jones Industrial Average was down 415.23 points, or 1.23%, at 33,396.17, the S&P 500 was down 56.93 points, or 1.33%, at 4,214.85, and the Nasdaq Composite was down 104.93 points, or 0.82%, at 12,734.36.
Coca-Cola Co inched 0.6% higher after it beat quarterly revenue and profit expectations, helped by strong prices and a rebound in demand for its sodas at theaters and restaurants.
Nearly a third of S&P 500 index firms are due to report this week. Of the 99 companies in the S&P 500 that posted earnings as of Friday, 77.8% reported above analysts' expectations, according to Refinitiv data.
In M&A news, Twitter Inc rose 3.8% after sources told Reuters it was set to accept Tesla Inc chief Elon Musk's 'best and final' offer of $54.20 per share in cash.
Silicon Motion Technology Corp jumped 7.7% after a report said the chipmaker is exploring a sale.
Declining issues outnumbered advancers for a 4.25-to-1 ratio on the NYSE and a 2.03-to-1 ratio on the Nasdaq.
The S&P index recorded one new 52-week high and 47 new lows, while the Nasdaq recorded 16 new highs and 343 new lows.