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Dow sinks 900 points, as S&P 500, Nasdaq post worst month since March 2020

The S&P 500 offered its worst year-to-date performance since World War II

Trader Sal Suarino, left, works on the trading floor at the New York Stock Exchange, April 28, 2022. (Nicole Pereira/AP)

Stocks nosedived Friday, with the three major U.S. indexes incurring heavy losses as Wall Street wrapped up a dismal April marked by investor hand-wringing over rising interest rates, relentless inflation, corporate earnings and global unrest.

The Dow Jones industrial average lost 939.18 points, or 2.8 percent, to close at 32,977.21. The S&P 500 index tumbled 155.57 points, or 3.6 percent, to land at 4,131.93. And the Nasdaq, home to tech stocks that bore heavy losses, plummeted 536.89 points, or 4.2 percent, to settle at 12,334.64.

The S&P 500 erased 8.8 percent in April, its worst month since March 2020, according to MarketWatch. It’s also down 13.8 percent in 2022, its worst start to the year since World War II, according to an analysis by CFRA Research chief investment strategist Sam Stovall. The Nasdaq slumped 13.3 percent during the month, its worst since the onset of the pandemic, while the Dow tumbled 4.9 percent.

Amazon got swept into the tech sell-off, tumbling more than 14 percent Friday after it reported its first quarterly loss in years and a weakened outlook. Apple dropped nearly 3.7 percent, Intel shed 6.9 percent and Google parent Alphabet lost 3.7 percent. Meanwhile, Netflix continued to nosedive after disclosing subscriber numbers fell in the first quarter; shares fell 4.6 percent Friday and have declined 49.2 percent since the start of the month. (Amazon founder Jeff Bezos owns The Washington Post.)

Investors are generally giddy when the calendar flips to April, analysts say, given the typical seasonal surges in consumer spending. And a bad April has the potential to spook economists and traders alike on the outlook for the rest of the year.

And more head winds are forming: the U.S. economy unexpectedly contracted 1.4 percent in the first quarter, according to federal data released Thursday. Inflation in March jumped to 8.5 percent, but the narrower core personal consumption expenditures price index, which excludes more volatile food and energy costs, showed signs of slowing.

Markets also have been volatile amid signs the Federal Reserve intends to fast track rate hikes to subdue inflation. The central bank is expected to announce its second increase of the year at the conclusion of its two-day policy meeting on Wednesday.

Internationally, Russia on Thursday cut off fossil fuel exports to Poland and Bulgaria, scrambling energy prices. Brent crude oil traded Friday at $109 a barrel, and RBOB gas, the benchmark for American gasoline, sold for $3.46 per gallon. Chinese health authorities have also instituted near total lockdowns in Beijing and Shanghai, the country’s two largest cities, to combat rising covid-19 case rates, throwing already stressed supply chains into disarray.

“The markets finally faced up to economic and geopolitical reality: all is not well,” George Ball, chairman of Houston-based financial services firm Sanders Morris Harris, said.

“Markets are worried that the Federal Reserve is hiking interest rates into a slowdown, thus making a major, unforced policy error,” Jamie Cox, managing partner at Harris Financial Group, said. “In other words, events around the world are slowing economic growth, especially in Europe and Asia, with no clear signs of letting up. As the negative GDP print yesterday suggests, the fallout is here at home as well. So, instead of simply re-pricing the value of cash flows with the expected path of rates, markets are factoring in recession.”

Service and natural resources firms excelled during April. Procter & Gamble gained nearly 5.2 percent over the month. Health insurance giant Humana grabbed better than 2 percent. Tyson Foods, the Arkansas-based poultry producer, and Marathon Petroleum each added 4 percent and 2.4 percent, respectively.

The Fed’s coming rate hikes, though worrisome for larger investors, has economists optimistic that workforce costs and inflation may soon level off.

“Consumers are the backbone of the economy and their spending continues at a normal rate despite everything the world has thrown at them in the first quarter this year from war in Europe to a stock market rout,” Chris Rupkey, chief economist at market research firm FWD Bonds, said in a Friday note. “There’s nothing about to go wrong with the economy with the consumer still cheerleading the way forward to prosperity. No recession on the horizon yet.”

Then Friday’s sell-off happened. Rupkey revised his assessment in an after-close note.

“The stock market has collapsed, the most leading of leading indicators shows the economy is going to crash,” he said. “Look out below.”

Kate Rabinowitz and Doug MacMillan contributed to this report.

correction

In April, the Dow declined 4.9 percent, the S&P 500 dropped 8.8 percent and Nasdaq fell 13.3 percent. An earlier version of this story listed inaccurate numbers.

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