Dow drops more than 700 points as S&P 500, Nasdaq head for worst month since March 2020

For the week, the Dow is on pace to fall 2%, while the S&P 500 is heading for a 2.8% decline and the tech-laden Nasdaq is on track to drop 3.3%, FactSet data show, at last check.

What’s driving markets?

U.S. stocks fell sharply Friday, with technology shares weighing on indexes.

“Tech is having a tough day,” with tumbling shares of e-commerce giant Amazon.com dragging down stock benchmarks, said Michael Reynolds, vice president of investment strategy at wealth manager Glenmede, in a phone interview Friday.

Shares of Amazon AMZN were down more than 15% Friday afternoon, after reporting its first loss in seven years. The company’s slide made it the biggest loser in the S&P 500 index in afternoon trading, according to FactSet data, at last check.

All 11 sectors of the S&P 500 were declining, with consumer discretionary SP500.25, -5.39%, real estate SP500.6010, -4.04% and information technology SP500.45, -3.21% showing the biggest losses, FactSet data show. Shares of Apple Inc. AAPL, -2.72% fell 2.7% after the tech giant topped earnings and set a revenue record, but warned of billions in added costs from supply-chain woes.

Friday marks the last trading day of April, which is heading toward being the worst month for the S&P 500 — down 5.3% through Thursday — since March 2020. The Nasdaq was already down 9.4% through Thursday and is also facing its worst monthly return since that pandemic low, according to FactSet.

The month has been consumed by worries on several fronts, including economic growth in China where COVID-19 cases are forcing lockdowns in several cities as well as supply chain disruptions caused by Russia’s war in Ukraine.

“There’s a lot for the market to be grappling with right now,” said Reynolds.

The CBOE Volatility Index VIX, +9.27% was trading around 31 on Friday afternoon, well above the 200-day moving average of about 21.5, according to FactSet data.

“The petrified tail-chasing we have seen this week as equity markets swing from ‘we’re all doomed, get me out,’ to ‘I don’t want to miss the absolute bottom of the stock market, get me in’ is perhaps indicative of the state of confusion out there,” Jeffrey Halley, senior market analyst at Oanda, told clients in a note.

On the heels of Thursday’s weak U.S. first-quarter economic growth data, the Federal Reserve’s favored inflation gauge — the core personal consumer expenditure price index for March —rose 0.3% with the headline index up 0.9%.

The headline rate of inflation climbed 6.6% over the 12 months through March, up from 6.4% in February, for the steepest increase since 1981, as measured by the PCE price index. But the rate of core inflation over the past 12 months slipped to 5.2%, from 5.3%, marking the first month-to-month decline in more than a year.

“The slowdown in year-over-year core PCE inflation is really nice to see. Inflation may have peaked in March, although the evidence is still a little ambiguous,” said Bill Adams, chief economist for Comerica Bank, in a note.

See: U.S. inflation rate surges to 6.6% based on PCE index — but there’s a silver lining

Adding to inflation worries, U.S. employment cost index accelerated in the first quarter to 1.4%, from 1.0% in the final three months of 2021, according to data released by the Labor Department Friday.

Meanwhile, the University of Michigan’s final reading of U.S. consumer sentiment in April slipped to 65.2 from an initial reading of 65.7, but still marked the first rise so far this year.

Friday’s economic data comes ahead of next week’s two-day Federal Reserve meeting, which many expect will conclude with a 50 basis-point interest-rate increase.

See: Fed’s half-percentage-point interest rate hike next week seen baked in the cake

Also, billionaire investor Warren Buffett and his right-hand man Charlie Munger will be in the spotlight Saturday as investors return to Omaha for Berkshire Hathaway Inc.’s BRK.A, -2.41% BRKB, -2.58% annual meeting. The event, dubbed “Woodstock for Capitalists,” had been held virtually the last two years due to COVID-19.

Don’t miss: 6 things to watch as Warren Buffett hosts ‘Woodstock for Capitalists’ on Saturday

Which companies are in focus?

• Intel Corp. INTC, -6.15% shares fell 6.7%, after the chip maker stuck to its full-year outlook amid expected weakness this quarter.
• Roku Inc. ROKU, +2.73% shares rose 2.8%, after the maker of digital media reported forecast-beating fiscal first-quarter revenue and earnings largely in line with projections. 
• Robinhood Markets Inc. shares HOOD, -1.44% fell 1.1% after the brokerage missed first-quarter forecasts and said fewer people were trading on its online platform.
• Tesla Inc. shares TSLA, +0.79% rose 0.4%. CEO Elon Musk tweeted late Thursday that he has no plans to sell more stock, after a Securities and Exchange Commission filing showed he sold nearly $4 billion in stock of the electric car maker amid his $44 billion deal for Twitter.
• Colgate-Palmolive Co. CL, -4.47% shares dropped 4.8% after the consumer goods maker said a tough cost environment to continued to weigh on profit.
• Chevron Corp. CVX shares fell 4.5% after revenues surged past expectations on a rise in oil and gas prices, but a rise in profit came in short of expectations. Exxon Mobil Corp. XOM missed profit estimates for the first quarter as it booked a $3.4 billion charge relating to its planned exit from Russia’s Sakhalin-1 project. Exxon shares slid 2.6%.
• Honeywell International Inc. HON shares gained 2.6% after profit and revenue topped expectations and the aerospace and building products company lifted its outlook.
• AbbVie Inc. ABBV shares dropped 8.3% after the drug maker’s revenues came in short of Wall Street expectations. Bristol-Myers Squibb Co. BMY told investors to expect less revenue from its cancer drug Revlimid and lower adjusted earnings per share for the full year in 2022. Shares were down around 3.1%.

How are other assets faring?

• The yield on the 10-year Treasury note  TMUBMUSD10Y, 2.882% rose about 2 basis points to around 2.89%, following the latest inflation data. Yields and debt prices move opposite each other.
• The ICE U.S. Dollar Index DXY, -0.67%, a measure of the currency against a basket of six major rivals, was up about 0.7%.
• In oil futures edged higher, the U.S. benchmark  CL.1, -1.19% was down 0.8% at around $104.50 a barrel. Gold for June delivery GCM22, +0.68%   GC00, +0.68% climbed 1.1% Friday to settle at $1,911.70 an ounce, but the yellow metal was down 1.2% for the week and fell 2.1% for the month.
• Bitcoin  BTCUSD, -3.84% was down 3.4% at $38,588.
• In European equities, the Stoxx Europe 600  SXXP, +0.74% closed 0.7% higher Friday, but remained down 0.6% for the week and dropped 1.2% in April. London’s FTSE 100  UKX, +0.47% advanced 0.5% Friday for a weekly gain of 0.3% and a gain of 0.4% for the month.
• The Shanghai Composite  SHCOMP, +2.41% closed 2.4% higher Friday, while the Hang Seng Index  HSI, +4.01% in Hong Kong jumped 4%. Japan’s Nikkei 225  NIK, +1.75% was closed for a national holiday.

—Barbara Kollmeyer contributed to this report.