The broader S&P 500 index slid about 1 percent, adding to the 3.6 percent it gave up the day before. The Nasdaq — which has been heavily battered as investors dump highflying tech companies — was trading down 1.2 percent after Thursday’s 5 percent dive.
Dow plunges more than 1,000 points as fears about economy intensify
The trends held despite a better-than-expected jobs report, which showed the United States added 428,000 positions in April despite the forces threatening economic growth. Relief about the strength of the labor market — with unemployment steady at a pandemic-low of 3.6 percent — was quickly eclipsed by concerns about rising interest rates.
“Friday’s strong jobs number and elevated wage growth confirms the Federal Reserve’s plans to raise interest rates to cool rising inflation, which is being driven in part by the tight labor market and rising wages,” said Robert Schein, chief investment officer of Blanke Schein Wealth Management, in comments emailed Friday to The Post.
“The stock market isn’t thinking about how the economy has performed in recent months, but instead what the economy will look like over the next 6-12 months,” Schein noted, with investors lasered in on the possibility that an aggressive rise in rates could trigger a recession.
US unemployment rate remains 3.6 percent, near 50-year lows
Stocks oscillated wildly this week — soaring one day and careening the next — as investors tried to wrap their heads around the Fed’s approach to reining in rampant inflation that is seeing into every aspect of American life. Mortgage rates are now at their highest level since 2009, according to data out Thursday from Freddie Mac, with the 30-year fixed average climbing to 5.27 percent.
The S&P 500 is now down 14 percent year-to-date, and the Dow, 10.5 percent, according to MarketWatch, while the Nasdaq has tanked 23 percent.
Although the market’s fluctuations appear dizzying, the reality is that the reset is in line with historical precedent: In the past 70 years, the S&P 500 has averaged a maximum drawdown of 14 percent annually.
“Concern about inflation is the culprit, as ever, and the wild swings we’ve seen this week are a reminder that sentiment is about as fragile as a porcelain doll,” Russ Mould, investment director at AJ Bell, said Friday in comments emailed to The Post. “The other fear is that the cure for inflation, higher rates, could be as bad as the disease if they choke off growth and even lead to recession.”
Moods were similarly sour overseas as investors reckoned with ongoing fallout from the war in Ukraine and the pandemic.
Mortgage rates spike to their highest level in nearly 13 years
Asian markets declined broadly as China’s tough pandemic restrictions continued to weigh on business activity. With the exception of Japan’s Nikkei 225, which closed nearly 0.7 percent higher, all the major indexes registered losses. Hong Kong’s Hang Seng Index tumbled 3.8 percent, while the Shanghai Composite index gave up more than 2 percent.
Earnings season has provided little relief for investors as the tangle of unpredictable economic and geopolitical tensions eats into companies’ bottom lines.
Under Armor stock tumbled more than 23 percent after the sports apparel maker reported a nearly $60 million loss in the first quarter, compared with the more than $77 million profit reported during the same period last year.
“We are continuing to serve the needs of athletes amid an increasingly more uncertain marketplace,” Patrik Frisk, Under Armour’s chief executive, said Friday in the company’s earnings report, citing supply chain challenges and “emergent covid 19 impacts in China.”
Adidas shares also sank 5 percent after the company lowered its 2022 sales forecast, citing the impact of China’s lockdowns and supply chain disruptions. The German sportswear company reported net profits of $327 million in the first quarter, down 38 percent from 2021.
In Europe, markets were trading lower across the board at midday, with the broader Stoxx 600 index down about 1.5 percent as the region prepared to enact sanctions targeting Russian oil, including a ban on petroleum imports.
Oil prices climbed higher in response, with Brent crude, the international oil benchmark, gaining 1.7 percent to trade around $112.75. West Texas Intermediate crude, the US oil benchmark, was trading around $110 per barrel.
Gold, an investor safe haven in times of turbulence, climbed 0.45 percent to trade at around $1,884.40 per troy ounce.