The broader Standard & Poor’s 500 Index fell about 1.1 percent, adding to the 3.6 percent it gave up the day before. The Nasdaq – which has been hit hard as investors dump high-tech companies – is down 1.9 per cent after Thursday’s 5 per cent drop.
The trends held despite a better-than-expected jobs report, which showed the US added 428000 jobs in April amid a number of factors threatening economic growth. Concerns about rising interest rates quickly overshadowed the relief over the strength of the labor market – with unemployment stabilizing at an epidemic low of 3.6 per cent.
“Friday’s strong job number and higher wage growth confirm the Fed’s plans to raise interest rates to cool rising inflation, which was partly driven by a tight labor market and rising wages,” said Robert Shen, chief investment officer at Blanke Schein Wealth. management, in comments emailed Friday to The Post.
“The stock market is not thinking about how the economy has performed in recent months, but rather, what the economy will look like over the next six to twelve months,” Shine noted, with investors pondering the possibility of a sharp rise in rates that could lead to a recession.
Stocks have wobbled wildly this week – soaring one day and concerned the next – as investors try to wrap their heads around the Fed’s approach to rein in the rampant inflation seeping into every aspect of American life. Mortgage rates are now at their limits The highest level Since 2009, according to data released Thursday by Freddie Mac, the 30-year flat average has risen to 5.27 percent. It was 5.1 percent a week ago and 2.96 percent this time last year.
The S&P 500 is down 14 percent year-to-date, the Dow is down 10.5 percent, according to MarketWatch, and the Nasdaq is down 23%.
Although market volatility sounds staggering, the truth is that the reset is in line with historical precedent: In the past 70 years, the S&P 500 has averaged a maximum decline of 14 percent annually.
However, history has also shown that “most of the Fed’s tightening cycles have led to a recession,” David Donabedian, chief investment officer at CIBC Private Wealth US, said Friday in comments emailed to The Post.
“Current market sentiment does not place much confidence in the Fed’s control of inflation without a recession,” Donabedian said, noting that doubts will likely persist “until there is clearer evidence that inflation has peaked and started to decline.”
The unease is reflected in readings of the Wall Street Fear Scale, or Cboe’x Volatility Index, which is up 90 percent for the year, according to the Market Watch.
The mood was similarly tense abroad as investors considered the ongoing economic fallout from the war in Ukraine and the pandemic.
Asian markets broadly declined as stricter epidemic-related restrictions in China continued to weigh on business activity; Widespread Corona Virus The outbreak has put entire cities out of business and crippled manufacturing and shipping centers across the country. With the exception of Japan’s Nikkei 225 index, which closed up about 0.7 percent, all major indices posted losses. Hong Kong’s Hang Seng Index fell 3.8 percent, while the Shanghai Composite Index lost more than 2 percent.
“There will be more than a few investors fairly happy that Friday is today,” Danny Hewson, a financial analyst at AJ Bell, said Friday in comments emailed to The Post. “Fragile is a word that has been used a lot to describe sentiment in the wake of a series of central bank rate hikes and disappointing expectations.”
Earnings season did not provide much relief to investors as the tangle of unpredictable economic and geopolitical tensions weighs on corporate earnings.
Hewson said, referring to Under Armour, whose shares plunged more than 23 percent on Friday after the sportswear company. It recorded a net loss of nearly $60 million in the first quarter. By comparison, it posted a profit of over $77 million in the same period last year.
“We continue to meet the needs of athletes amid an increasingly uncertain market,” Armor Division CEO Patrick Friske said Friday in the company’s earnings report.
Adidas shares also fell 5 percent after the company cut its 2022 sales forecast, citing Chinese shutdowns and supply chain disruptions. The German sportswear company reported net profit of $327 million in the first quarter, down 38 percent from 2021.
In Europe, markets closed generally in the red, with the broader Stoxx 600 Index sliding 1.9% as the region prepared to enact sanctions targeting Russian oil, including a ban on petroleum imports.
Oil prices rose in response, with Brent crude, the international oil standard, up 1.8% to trade near $113 a barrel. West Texas Intermediate crude, the US oil benchmark, rose 2 percent to trade around $110 a barrel.
Gold, an investor’s safe haven in times of turmoil, rose 0.7 percent to trade at around $1,888.70 an ounce.
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