The stock market wrapped up the week with significant declines across major indexes due to heightened geopolitical tensions and concerns over global economic growth. The Dow Jones Industrial Average fell by 1.2%, the S&P 500 dropped 1.5%, the Nasdaq Composite decreased by 1.6%, and the Russell 2000 saw a 1.9% reduction.
Reports suggesting a potential attack by Iran on Israel ahead of the weekend spurred fears, leading to a sell-off in the markets and a rise in oil prices to $85.58 per barrel, a 0.7% increase, due to concerns over supply disruptions.
Treasuries gained as investors sought safety amidst the geopolitical unrest, even though they experienced overall declines for the week. This was as market participants adjusted their expectations for rate cuts, with the 2-year note yield falling nine basis points to 4.88% today, despite a 15 basis point increase over the week. The 10-year note yield decreased by eight basis points today to 4.50%, climbing 12 basis points over the week.
Concerns were also fueled by China's reported decline in exports by 7.5% year-over-year and imports by 1.9% year-over-year for March, raising alarms over global economic health.
The semiconductor sector notably impacted the broader market's losses following the directive for Chinese telecom companies to replace U.S.-made processors with alternatives by 2027. This led the PHLX Semiconductor Index (SOX) to tumble by 3.3%.
All 11 sectors of the S&P 500 experienced declines, ranging from 0.7% in utilities to 1.8% in materials.
At the onset of the Q1 earnings reporting period, JPMorgan Chase (JPM, Financial) dropped 6.5% after CEO Jamie Dimon expressed caution in his macroeconomic outlook and maintained the bank's net interest income guidance for 2024. Citigroup (C, Financial) and Wells Fargo (WFC, Financial) also saw declines following their earnings releases.
Year-to-date performance for major indexes shows the Nasdaq Composite up by 7.4%, the S&P 500 by 7.8%, the S&P Midcap 400 by 4.3%, the Dow Jones Industrial Average by 0.8%, and the Russell 2000 down by 1.2%.
Today's economic data revealed slight increases in March Import Prices and Export Prices, alongside a preliminary April reading of the University of Michigan Index of Consumer Sentiment at 77.9, slightly below expectations. Notably, inflation expectations have risen, aligning with recent CPI data and Federal Reserve officials' comments on being patient before implementing rate cuts.
Looking forward, the economic calendar for Monday includes March Retail Sales and the April NAHB Housing Market Index, providing further insights into consumer behavior and the housing market’s health.
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Today's News
On Friday, semiconductor stocks such as Intel (INTC, Financial) and AMD (AMD, Financial) experienced significant losses, nearing 5%, following reports that China has mandated telecom companies to replace foreign chips with domestic ones by 2027. This directive poses a substantial challenge for Intel and AMD, given China's role as a major market for their products. Intel is set to report its Q1 results on April 25, while AMD will do so on May 1. Nvidia (NVDA, Financial) also saw a 3% decline, continuing its downward trend since last month's GTC event.
Wall Street's major indices, including the Nasdaq Composite, S&P 500, and the Dow Jones Industrial Average, all fell by more than 1% due to disappointing guidance from JPMorgan (JPM, Financial) and concerns over potential conflict in the Middle East. This led investors to seek refuge in bonds and the dollar, contributing to the overall market downturn.
AT&T (T, Financial) shares dropped for the seventh consecutive session, reflecting a broader market trend of skepticism towards the telecom sector, exacerbated by rising interest rates and AT&T's struggle to reduce its debt post-Warner Media spin-off.
Options trading volume has spiked for electric vehicle stocks Nikola (NKLA, Financial) and Rivian Automotive (RIVN, Financial), indicating heightened market volatility. Additionally, the market is closely watching Capri Holdings (CPRI, Financial) and Tapestry (TPR, Financial), as the Federal Trade Commission reviews their proposed $8.5B merger, with a decision expected soon.
As the earnings season commences, financial giants JPMorgan Chase (JPM, Financial), Wells Fargo (WFC, Financial), Citigroup (C, Financial), and BlackRock (BLK, Financial) have all surpassed analysts' expectations for both revenue and earnings, setting a positive tone for the quarter despite JPM's stock dip following its earnings announcement.
Short interest in the information technology sector has increased, with Enphase Energy (ENPH, Financial) and Super Micro Computer (SMCI, Financial) being among the most shorted stocks. Conversely, Apple (AAPL, Financial) remains the least shorted stock in the sector, showcasing investor confidence in its stability.
Corteva (CTVA, Financial) saw a decline in its stock price after J.P. Morgan downgraded it to Neutral from Overweight, citing challenges in meeting its earnings guidance amid falling crop chemical prices.
Bitcoin (BTC, Financial) experienced a slight weekly decline amid broader market sell-offs and increased volatility, highlighting the cryptocurrency's sensitivity to global economic indicators and investor sentiment.
Zoetis (ZTS, Financial) shares hit a new 52-week low following reports of adverse events linked to its osteoarthritis pain drugs for animals, raising concerns about the company's future revenue projections from these products.
Tilray Brands (TLRY, Financial) continued its downward trend after cutting its FY outlook, further dampening sentiment in the cannabis sector and reflecting broader challenges faced by the industry.
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