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Wall Street’s losses worsen as markets tumble worldwide 

 May 1, 2022

NEW YORK (AP) – Shares lost more on Wall Street on Monday, leaving the S&P 500 at its lowest level in more than a year.

The sell-off came as renewed concerns about China’s economy piled up over global financial markets already hit by rising interest rates.

The S&P 500 fell 3.2%, deepening its losses after five consecutive falling weeks, the largest series of its kind in more than a decade.

The Dow Jones Industrial Average fell 2% and the Nasdaq fell 4.3% as technology stocks regained the bulk of sales. Monday’s sharp drop leaves the S&P 500, Wall Street’s main indicator of health, down 16.8% from a record earlier this year.

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The Wall Street recession followed a global downturn in markets. Not only have stocks fallen across Europe and much of Asia, but everything from old-fashioned crude oil to new-economy bitcoin. Bond yields and the price of gold also fell.

Among U.S. stocks, the energy sector, which has peaked in recent weeks, saw some of the sharpest declines as oil and gas prices fell. Marathon Oil and APA Corp. each sank more than 14%.

“Basically, investors have a hard time finding a place to hide,” said Sam Stovall, chief investment strategist at CFRA. “Traditional safe havens, such as defense sectors or bonds, are not doing so well. “The goods are not going well.”

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The S&P 500 fell 132.10 points to 3,991.24 points. The Dow fell 653.67 points to 32,245.70 points. The Nasdaq fell 521.41 points to 11,623.25.

Shares of smaller companies also fell broadly. Russell 2000 lost 77.48 points, or 4.2%, to 1,762.08.

Most of this year’s damage was a result Aggressive overthrow of the Federal Reserve away from doing what it can to support financial markets and the economy. The central bank has already withdrawn its key short-term interest rate from a record low of near zero, where it remained almost throughout the pandemic. Last week, it signaled additional increases from double the usual amount in the coming months, in hopes of offsetting high inflation sweeping the economy.

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Planning moves will slow down the economy, making borrowing more expensive. The risk is that the Fed could cause a recession if it raises interest rates too high or too fast. Higher interest rates, meanwhile, are discouraging investors from paying very high prices for investments, as investors may have a better return on holding government-backed bonds than they did a few weeks ago.

This has helped drop bitcoin by about 29% since the beginning of April, for example. It fell 9.7% on Monday, according to Coindesk.

Concerns about the world’s second-largest economy were compounded by gloomy Monday. Analysts commented on the weekend by a Chinese official who warned of a serious job situation as the country hopes to stop the spread of COVID-19.

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Authorities in Shanghai have it again stricter restrictionsamid complaints from citizens that it feels endless, just as the city was coming out of a month of severe lockdown following an outbreak.

The fear is that China’s tough policies against COVID will add more disruption to world trade and supply chains, while dragging its economy, which for years has been the main driver of global growth.

In the past, Wall Street has come under similar pressure due to the strong increase in corporate profits.

But this latest earnings reporting season for big US companies has brought less excitement. Companies as a whole report higher-than-expected profits, as is usually the case. But discouraging signs of future growth abounded.

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The number of companies reporting “weak demand” in their teleconferences following earnings reports has jumped to its highest level since the second quarter of 2020, wrote strategic analyst Savita Subramanian in a report by BofA Global Research. Profits from technology are also lagging behind, he said.

The technology sector is the largest in the S&P 500 in terms of market value, giving it extra weight in market movements. Many technology-oriented companies saw profits skyrocket as people looked for new ways to work and have fun while locked up at home. But the slower earnings growth leaves stocks vulnerable as prices soared due to expectations of continued earnings.

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The higher interest rates planned by the Fed also hit technology stocks hard because they are considered one of the most expensive on the market. The loss of 25.7% of the Nasdaq composite for 2022 so far is much more intense than that for other indicators.

Electric carmaker Rivian Automotive fell 20.9 percent on Monday as restrictions on some major investors closed their shares after they went public six months ago. The company has lost more than three-quarters of its value so far this year.

The performance of the 10-year Treasury Department jumped to its highest level since 2018, as inflation and expectations for Fed action increased. It moderated on Monday, falling to 3.03% from 3.12% late on Friday. But it is still more than double where it started the year.

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Oil prices fell, boosting energy reserves. US benchmark crude fell 6.1% to $ 103.09 a barrel, although it is still up about 40% this year. Brent crude, the international standard, fell 5.7% to $ 105.94 a barrel.

___

AP Business author Yuri Kageyama contributed. Veiga reported from Los Angeles.

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