The Nasdaq dropped 4.2% Friday, bringing its losses for the month to more than 13%, its worst showing since October 2008. The index is down 21% in 2022, its worst start to a year on record.
The broader S&P 500 has fallen for four consecutive weeks, shedding 8.8% in April and bringing its year-to-date losses to 13%. The Dow Jones Industrial Average fell 4.9% this month and is down more than 9% this year. Both indexes logged their worst months since March 2020.
The punishing declines in tech and growth stocks mark a dramatic shift from recent years. Investors have ditched shares of some of the biggest tech companies, which had been stock-market darlings for much of the past decade and propelled the indexes’ gains from the pandemic lows.
Within just a few months, some of the most reliable winners morphed into losers. Netflix dropped 49% in April. Nvidia fell 32%. And PayPal Holdings declined 24%. All three stocks are down more than 35% in 2022.
Worries about the Federal Reserve raising interest rates, soaring inflation and the path of the economy have brought stocks sharply lower from the record levels at which they started the year. Many pandemic-era winners also have come falling back to earth as consumer tastes have evolved since 2020. And recently, the earnings season has been dotted with some high-profile disappointments, delivering head-spinning one-day stock moves following the reports.
“We’re going into a higher volatility regime, when fundamentals matter again,” said Aashish Vyas, investment director at Resonanz Capital. “It does seem like we are at a systemic shift.”
The FAANG stocks, consisting of the popular quintet of Facebook parent Meta Platforms,
Netflix and Google Parent Alphabet,
have collectively lost more than $1 trillion in market value this month, the most since Facebook started trading in May 2012.
Investors say they will be tracking the next batch of earnings results in coming days for signs of slowing growth from other companies. So far, corporate profits are on track to rise 7% for the quarter, according to FactSet, the lowest year-over-year earnings growth rate since the last quarter of 2020.
Amazon shares fell 14% on Friday, their biggest one-day drop since 2006, bringing their losses for the year to 26%. The company posted its first quarterly loss in seven years—a result that reflected broad economic trends related to a slump in online shopping, higher costs from inflation and supply-chain woes, and market jitters over electric-vehicle startups.
Apple cautioned Thursday that the resurgence of Covid-19 in China threatens to hinder sales by as much as $8 billion in the current quarter. Shares fell 3.7% Friday and have dropped 11% for the year. Last week, Netflix shares tumbled more than 30% in a single session after the earnings report showed the company lost subscribers. Moves in large technology companies can have outsize impacts on major stock indexes due to their higher weighting relative to other stocks.
Credit: www.wsj.com /