Week 15 in Brief
U.S stocks closed lower for the week as investors worried about rising inflation, consumer spending & prospects of an economic slowdown. Major indices fell after economic data showed U.S. inflation surged to a new four-decade high of 8.5% in March compared to a year ago, on higher food and energy costs.
How did the major indices perform?
- The Dow Jones Industrial Average fell 269.89 points, or 0.8%, to 34451.23 this week.
- The S&P 500 Index lost 95.69 points, or 2.1%, to 4392.59.
- The Nasdaq Composite dropped 359.92 points, or 2.6%, to 13351.08.
What drove the US market?
- Big Bank earnings: Quarterly earnings season kicked off this week with quarterly reports from banks and financial services firms. Banks reported mixed earnings, with JPMorgan Chase, BlackRock and Wells Fargo missing some expectations after seeing a drop in profit, raising worries of an economic downturn. Bank earnings were pulled down due to the end of the pandemic era stimulus that saw them report bumper profits during the season. This week, Goldman Sachs, Citigroup, and Morgan Stanley all added less than 1%. The KBW Nasdaq bank index fell 2.6% during the same period.
- Treasury Yields: The yield on the benchmark 10-year U.S. Treasury note finished the week at 2.808%, its highest level since December 2018, with investors betting on rising interest rates. Bond yields and prices move in opposite directions.
- Economic data: A reading on the consumer price index showed an 8.5% increase from a year ago, the fastest annual gain since December 1981 — and higher than the Dow Jones estimate for 8.4%. Meanwhile, supplier prices for March increased 11.2% compared to last year, with the biggest gain going back to 2010.
Which US stocks were in focus Friday?
- This week, inflation fears and rising bond yields drove tech shares lower on Thursday, and investors dumped growth stocks in favor of more stable assets.
- Microsoft shares fell 2.7%, Apple tumbled 3%, and Google slipped 2.4%. Chip stocks also slumped with Nvidia sliding about 4.3%, and Advanced Micro Devices falling about 4.8%.
- Meanwhile, Tesla CEO Elon Musk offered to buy Twitter for $54.20 a share, noting that that was his best and final offer for the social media company, which according to him, needs to be transformed privately in order to thrive. Twitter shares fell about 1.7%, while Tesla shares declined 3.6%.
How did the European markets perform?
- European stocks closed the week mixed as investors monitored comments from the European Central Bank that it will end its asset purchase program (APP) will end in the third quarter. The pan-European Stoxx 600 provisionally ended up 0.68%, with travel and leisure stocks gaining 3.19% while technology dropped 0.46%.
- The ECB maintained its monetary policy but confirmed it will end its bond-buying in the third quarter. Once the bond buying program is completed, the ECB is likely to raise interest rates, in the same path as the Bank of England and the U.S. Federal Reserve.
- In stocks, Hungary’s Wizz Air closed at 8.4% after its post-close trading statement. Atlantia gained 4.3% after the Benetton family, and U.S. investment firm Blackstone tabled an offer for the Italian road and rail firm. Meanwhile, Swedish telecoms company Ericsson dropped 8.2% after it warned investors that U.S. regulators would likely fine it for handling a bribery investigation in Iraq.
How did Asian markets perform?
- Asian stocks were mostly higher on Thursday as investors reacted to monetary policy tightening announcements by central banks in South Korea and Singapore. But they fell on Friday as US and European markets remained closed. Shutdowns in major Chinese cities due to coronavirus outbreaks and the war in Ukraine have been weighing on sentiment.
- Japan’s benchmark Nikkei 225 lost 0.3% to finish at 27,093.19. South Korea’s Kospi dipped 0.8% to 2,696.06. The Shanghai Composite lost 0.5% to 3,211.24.
Oil prices slipped on Thursday in thin trade ahead of a public holiday, as traders weighed a larger-than-expected build in U.S. oil stocks against tightening global supply. Brent futures were down 86 cents, or 0.8%, at $107.92 a barrel, while U.S. West Texas Intermediate futures were off $1.10 or 1.1%, at $103.15 a barrel.
- The U.S. dollar rose to 126.45 Japanese yen from 125.87 yen. It is hovering at 20-year highs. The euro cost $1.0817, down from $1.0829.
- Bitcoin edged up 1.3% Friday to trade at $40,408.68 from its Thursday 5 p.m. ET level. The cryptocurrency gained 4.8% this week.
The earnings season continues, and investors will parse earnings from companies including Bank of America, Charles Schwab, Tesla, United Airlines, American Airlines, Alaska Air Group & Union Pacific.