US stocks plummeted on Friday and are looking to end a month of volatility, as a new set of mixed quarterly results from other major technology companies weighs heavily on major stock indexes.
The S&P 500, Dow Jones Industrial Average and Nasdaq Composite each declined. The Treasury yield has increased, and the 10-year profit margin has risen to more than 2.9%. Shares of tech juggernaut Amazon slipped after the company unexpectedly posted losses on a quarterly basis and provided a weaker forecast for the current weaker quarter than expected. Apple's stock has declined even after the iPhone maker surpassed its sales and quarterly profits, though the company still cites ongoing supply chain issues.
The previous day, the S&P 500 closed Thursday session very high, gaining 2.5%, while the Nasdaq Composite rose 3.1% on its best day since March 16. But despite these noted gains, the S&P 500 was still on track. sending its third monthly decline in four months.
The volatility has resurfaced in recent weeks amid concerns over tight fiscal policies from the Federal Reserve that could destabilize the economy. And this fear is compounded by the ongoing turmoil due to the ongoing inflation, global unrest and the ongoing COVID outbreak in China. The S&P 500 was on the verge of a decline of about 5% in April, based on the closing level on Thursday.
"There is a lot of repetition going on, whether it is a double rate hike, a return to interest rates, or a repetition of inflation expectations, against the Fed's tightness," Todd Jablonski, chief investment officer of the Global Asset Allocation. "The threat of a slowdown economy, the threat of inflation, and the threat of high electricity prices due to the Ukrainian conflict [are] all forms of collusion to really undermine investor confidence and sentiment."
In addition, this week's data on corporate profits and the wider economy showed signs of slowing development. Results from Big Tech companies including Alphabet and Twitter have shown a decline in online advertising businesses as companies go back to spending money on marketing due to measuring consumer demand. And throughout this period of leadership, dozens of companies across the industry have pointed to higher costs of installation and labor, as well as further disruption of the supply chain.
Against this backdrop, the US economy entered into a contract for the first time since the second quarter of 2020 earlier this year, government data showed Thursday. 1.4% annual GDP decline in the first quarter of the U.S. came as a surplus trade, inventory and each government investment carried the weight of the gross domestic product, and as consumer spending came in at a lower rate than expected.
However, a weaker GDP printing than expected may also support the case for Federal Reserve members to be more cautious as they prepare to raise interest rates and begin exporting goods to the central bank balance sheet. These measures can increase borrowing costs and help reduce the need to curb inflation - but also put the economy at risk of a sharp decline if financial conditions tighten too quickly.
"There are a lot of worries around, are we going into a recession in the next 24 months because the Fed could raise interest rates significantly?" Ryan Payne, president of Payne Capital Management, told Yahoo Finance Live. "I think that's what worries the markets, and moreover we have a war in Ukraine and these inflation rates have just passed the roof."
