Stocks extend declines on earnings, rate risks
BNN Bloomberg
U.S. stocks fell as disappointing earnings and prospects for aggressive interest-rate hikes weighed on sentiment.
U.S. stocks fell as disappointing earnings and prospects for aggressive interest-rate hikes weighed on sentiment.
The S&P 500 slid more than 1 per cent with all 11 industry groups in the red. The tech-heavy Nasdaq 100 fell in choppy trading. Treasuries were mixed, with yields on the policy-sensitive two-year Treasury note rising 3 basis points. The dollar rose to the highest level since June 2020.
Among corporate earnings, Verizon Communications Inc. had its biggest drop in two years after cutting its full-year sales forecast. American Express Co. fell after the credit-card giant reported that expenses jumped in the first quarter.
Traders have increased bets on the Federal Reserve tightening policy after Chair Jerome Powell outlined his most aggressive approach yet to taming inflation, potentially endorsing two or more half percentage-point rate increases.
“A more aggressive monetary policy is getting priced across the board on the short end of the curve while also contaminating the rest of it,” said Florian Ielpo, head of macro at Lombard Odier Asset Management. “The equity market had difficulties factoring in this surge in yields, over an earnings-season period that appears to be shaky.”
The health-care sector led losses in the S&P 500, with HCA Healthcare Inc. sinking after cutting its forecst on labor costs. Intuitive Surgical Inc. tumbled after its systems placements disappointed some analysts even as revenue beat estimates.
