US markets ended April in deep disarray as investors turned their backs on once favored tech companies amid worries about the economy.
A sell-off in Amazon shares after the company reported a drop in online sales helped the Nasdaq index fall more than 4% on Friday.
April was the worst month for the tech-heavy index since the 2008 financial crisis.
But the market downturn isn’t limited to tech stocks.
The broader S&P 500 posted its biggest one-day decline since June 2020, down nearly 14% year-to-date.
The Dow Jones Industrial Average fell more than 6% in April and about 10% since January.
Markets – often viewed as an indicator of future economic health – have been jittery as economic threats mounted.
Inflation is raging in the US and elsewhere at a decade-high, fueled by higher energy prices and the war in Ukraine.
Key supply chains have been impacted by both the war and the ongoing impact of the Covid pandemic, particularly in China, where lockdowns are still in place to curb the spread of the virus.
Apple has already warned that it expects a major slump in its business due to disruptions in China.
And Amazon, which benefited from the pandemic boom in home delivery demand, has found that effect is now beginning to wear off.
- Amazon reports loss as online sales falter
- US economy shrinks as war in Ukraine hits trade
On Friday, Amazon shares fell 14% after reporting declining online sales and the first quarterly loss since 2015. Shares of smaller online shopping site Etsy fell more than 8%.
“Market participants are nervous initially, so there’s a quick trigger with these names when there’s uncertainty,” said Keith Buchanan, senior portfolio manager at Globalt Investments in Atlanta.
“When assumptions about the growth of these companies don’t hold true, there’s definitely a ‘shoot first, ask questions later’ mentality.”
While consumer spending – the main driver of the US economy – has held up so far, there are growing concerns that rising prices could make buyers more cautious and lead to a slowdown.
Earlier this week, the US reported that its economy contracted 0.4% in the first three months of the year. The European Union announced on Friday that it had posted growth of just 0.2% in the first quarter.
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