This year has so far proved volatile for Wall Street. Stocks have not done well in 2022.
Angela Weiss/AFP/Getty Images
The stock market was lower Friday, after disappointing earnings reports from Apple and Amazon.com . Inflation data also hit the wires — and the bond market has taken note.
Futures for the Dow Jones Industrial Average were down 112 points, or 0.3%, after the index climbed 614 points on Thursday. S&P 500 futures signaled a start 0.9% lower with the Nasdaq Composite poised to retreat 1.1%. The S&P 500 and Nasdaq rallied more than 2.5% each on Thursday.
“Futures are moderately lower following underwhelming earnings and guidance from AMZN and AAPL,” wrote Tom Essaye, founder of Sevens Report Research.
Apple (ticker: AAPL) reported a profit of $1.52 a share, beating estimates of $1.43 a share, on sales of $97.28 billion, above expectations for $93.89 billion. The results weren’t the disappointment. The company said that supply constraint in China resulting from the country’s Covid-related lockdown could reduce second-quarter sales by between $4 billion to $8 billion. The stock fell 2.3%.
Amazon (AMZN) reported a profit of $7.38 a share, missing estimates of $8.36 a share, on sales of $116.44 billion, above expectations for $116.3 billion. Higher costs like labor and shipping weighed on the company’s profit. The company also guided for sales of $118.5 billion for the current quarter, at the midpoint of its range, missing estimates of $125.5 billion. The stock dropped 10%.
Amazon and Apple’s stock price declines are bringing the Nasdaq lower. The two company’s combined market capitalizations as of Thursday’s close was $4.14 trillion, about 20% of the Nasdaq’s aggregate market cap.
The S&P 500 has fallen 10% this year and is on track to close out its worst January–April period since 1970. The Nasdaq has been flirting with a bear market, down 19% in 2022—its worst first four months to start a year since 1973, and the second-worst on record—as the tech stocks that pack the index tumbled.
Elsewhere, inflation continues to remain high. The personal consumption expenditures index gained 6.6% year-over-year in March. Markets had been hoping that inflation would have peaked, but that rate is higher than the 6.4% gain in prices seen for February.
There is good news, though. The core PCE result, which does not account for the volatile—and recently soaring—energy and food prices, gained just 5.2% in March. That’s below the previous result of 5.4%. It means prices across the board are rising at a slower pace.
That could conceivably ease the pressure on the Federal Reserve to hike interest rates aggressively, which markets would welcome. The Fed will announce its interest-rate decision next week.
That isn’t exactly what the market is signaling, though. The 2-year Treasury yield, which reflects market expectations for the benchmark lending rate a couple years from the present, rose to 2.74% from around 2.7% just before the inflation data.
The stock market was essentially unchanged from just before the inflation print.
Overseas, the pan-European Stoxx 600 was 1.1% higher, and Tokyo’s Nikkei 225 gained 1.8%.
Here are stocks on the move Friday:
Tesla (TSLA) was up 2% in premarket trading, after CEO Elon Musk said via Twitter that he had no further plans to sell Tesla stock after Friday. The billionaire executive recently sold some $4 billion worth of the company’s shares, presumably to help fund his takeover of social-media group Twitter (TWTR).
Write to Jacob Sonenshine at jacob.sonenshine@barrons.com and Jack Denton at jack.denton@dowjones.com
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