U.S. stocks take sharp plunge ahead of major tech earnings

Shares fell on Tuesday afternoon as markets remain turbulent amid an intense week of gains by some of the country’s largest companies, such as Microsoft and Apple.

The S&P 500 closed up 2.8%. The Dow Jones Industrial Average fell 809 points, or 2.4%, to 33,240, and the Nasdaq fell nearly 4%. The high-tech Nasdaq has fallen 11% so far in April and is on its way to its worst calendar month since the 2008 financial crisis. It has also fallen 21% from its November record.

“It’s that the market is feeling a little more comfortable with a slowdown at best and fears of recession at worst,” said Ross Mayfield, Baird’s investment strategy analyst.

The fall in major indices is still a mostly weak day on Monday which turned into a late rebound, led in part by technology stocks after Twitter agreed to sell to Tesla CEO Elon Musk. The social media company fell 3.6% on Tuesday, while Tesla fell 11% due to concerns that Musk would be distracted and less committed to running the electric vehicle maker.

Technology stocks once again led the broader market and had some of the biggest losses. Microsoft fell 3.2% and Apple 3.4%. Microsoft will report on its latest financial results after the market closes on Tuesday, while Apple will report on Thursday.

Bond yields fell. The 10-year Treasury yield fell to 2.77% from 2.82% on Monday afternoon.

Energy companies gained ground along with a 3% increase in the price of U.S. crude oil.

Too much for the “stomach market”

The last few days have been volatile, as Wall Street is also trying to assess how Strict blockade measures by China The fight against COVID-19 will affect the wider global economy, including its impact on the demand for the world’s second largest economy.

“The market had become comfortable, to some extent, with the Fed, but when demand is destroyed in China, the market is a bit supportive,” Mayfield said.

The difficulties of the blockade have raised questions about the Chinese government’s adherence to its hard line “zero-COVID” strategy., Lucy Craft of CBS News reported. As Shanghai eases restrictions and increases COVID-19 cases in Beijing, China’s GDP is projected for a “zero-COVID recession,” according to Craig Botham, China’s chief economist at Pantheon Macroeconomics.

“We expect a further slowdown in growth in the second quarter, equivalent to a recession, according to our GDP estimate,” Botham said in a monthly report.

Earnings remain a key focus of Wall Street for the rest of the week. Investors are closely reviewing the latest round of corporate newsletters to get a better idea of ​​how different industries are managing rising inflation, which has caused many companies to raise prices. The results will also give a clearer picture of how consumers react to the highest prices of all gasoline food.

The persistent rise in inflation has led the Fed to change its monetary policy to aggressively fight inflation. Federal Reserve Chairman Jerome Powell told the central bank may raise short-term interest rates to double the usual rate pace at the next meetings, from two weeks. The Fed has already raised its interest rate to one day once, the first such increase since 2018.

Economists and investors are worried that the U.S. economy may slow sharply or even fall into recession due to large interest rate hikes expected to boost the Fed.

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