Dow falls more than 600 points, S&P 500 tumbles below 4,000 to the lowest level in a year
Stocks fell sharply Monday, pushing the S&P 500 to a fresh 52-week low, as the market sell-off continued and traders struggled to find their footing from last week’s big market swings.
The Dow Jones Industrial Average dropped 450 points, or 1.4%. The S&P 500 fell 2.4%, while the Nasdaq Composite lost 3.3%.
The S&P 500 traded as low as 4,003.17 on the day, as all sectors except for consumer staples dipped into the red. Amid the losses, the benchmark 10-year Treasury note yield hit its highest level since late 2018, trading well above 3%.
“This is significant repricing, this is significant dislocation and this is all being spurred and driven by Federal Reserve policy,” said Jeff Kilburg of Sanctuary Wealth. “The only way I see us finding the bottom in equities short-term, the only way I see markets healing is if the Fed has the ability with the tools in their toolbox to calm down interest rates. The 10-year note needs to go back under 3%.”
Rising rates continued to crush technology names such as Meta Platforms and Alphabet, which fell more than 4.3% and 1.7%, respectively. Amazon, Apple and Netflix all fell nearly 3%, while Tesla and Nvidia dipped more than 6%.
The combination of high rates and a potential recession as inflation surges also hit other areas of the market. Consumer stocks like Nike suffered along with industrials such as Caterpillar and Deere. Bank stocks also came under pressure with Bank of America falling more than 3%.
Boeing marked the biggest loser in the Dow, plunging more than 7% followed by energy bellwether Chevron which slipped 5.5% as U.S. oil futures continued to slide. Amgen, Walmart, Home Depot and 3M remained bright spots in the market, posting gains despite the broader sell-off.
“We expect markets to remain volatile, with risks skewed to the downside as stagflation risks continue to increase,” wrote Barclays’ Maneesh Deshpande. “While we cannot discount sharp bear market rallies, we think upside is limited.”
Wall Street is coming off a wild week, as investors weighed the prospects of rising interest rates against the potential of slower economic growth.
Last week, the Nasdaq Composite lost 1.54%, while the S&P 500 and Dow dropped 0.21% and 0.24%, respectively. It was the sixth straight losing week for the Dow, and the fifth straight for the other two major indexes.
While the cumulative moves for the week were not out of the ordinary, some of the day-to-day swings were eye-popping. The Dow had its best day since 2020 on Wednesday, but then erased all those gains and more on Thursday.
The short-lived Wednesday rally came after Federal Reserve Chair Jerome Powell said the central bank was not considering a 75-basis-point rate hike at upcoming meetings. Stocks rallied and bond yields fell following that comment but reversed course on Thursday.
Billionaire hedge fund manager David Tepper told CNBC’s Scott Wapner on Friday that Powell’s statement was an “unforced error” that contributed to market volatility.
Chart analysts are also seeing signs of a prolonged market downturn emerge.
“Our thinking is that stocks are likely to continue lower because we have not yet seen enough technical evidence to suggest a bottom process has started,” wrote JC O’Hara of MKM Partners. “Technical indicators are not oversold enough. The volume profile has shown little if any signs of real capitulation.”
On the earnings front, Palantir cratered 21% on weak revenue guidance and BioNTech gained 5.8% following a strong quarter. First-quarter earnings season is slowing down, but there are several notable reports including Walt Disney and Occidental Petroleum slated for later in the week.