NEW YORK, RAW – The S&P and the Nasdaq have closed lower at the end of a holiday-shortened week as bond yields resumed their uphill climb and investors contended with mixed earnings and economic data.
All three major US stock indexes posted weekly losses on Thursday ahead of the Good Friday holiday.
“It’s a combination of continued worries still there,” said Ryan Detrick, chief market strategist at LPL Financial in Charlotte, North Carolina.
“It’s a mixed bag earning season so far, and that, coupled with high inflation and the hawkish Fed have led to selling ahead of the holiday weekend.”
Rising 10-year Treasury yields pressured growth stocks, weighing the S&P 500 and the Nasdaq into negative territory, while the Dow posted a more modest loss.
“The higher yields pressure higher growth stocks as their net present value … takes a hit when yields go higher,” Detrick said.
A quartet of large US banks shifted the first quarter reporting season into overdrive, with Goldman Sachs Group Inc , Citigroup Inc, Morgan Stanley, and Wells Fargo & Co all posting results.
While all four beat estimates, they also reported steep profit declines. Their share price reaction was mixed, and the broader S&P 500 Finance index closed lower.
“There’s some concerns this earnings season,” Detrick added. “Expectations are the lowest since the recovery started and it’s got investors cautious of how companies will step up to the earnings altar in the comings weeks.”
A host of economic data showed spiking petrol prices helped retail sales beat consensus and prompted the largest jump in import prices in nearly 11 years.
The data falls in lockstep with other recent indicators, which appear to cement aggressive inflation-curbing actions from the Federal Reserve in the coming months, including a series of 50 basis point interest rate hikes.
Tesla Inc Chairman Elon Musk offered to take Twitter Inc private with a $US41 billion cash offer. The social media company’s shares oscillated throughout the session but closed in negative territory.
The Dow Jones Industrial Average fell 113.36 points, or 0.33 per cent, to 34,451.23, the S&P 500 lost 54 points, or 1.21 per cent, to 4,392.59 and the Nasdaq Composite dropped 292.51 points, or 2.14 per cent, to 13,351.08.
Of the 11 major sectors in the S&P 500, tech shares fared the worst, sliding 2.5 per cent.
Analysts now expect aggregate annual S&P 500 earnings growth of 6.3 per cent, less optimistic than the 7.5 per cent growth projected at the beginning of the year.
Thursday marked the monthly expiration for options contracts, an occurrence that has in the recent past helped amplify stock market gyrations as investors make adjustments to account for millions of expiring options contracts on stocks, ETFs and indexes.