S&P 500 in Bloodbath as Softer Earnings, Rate-Hike Jitters Bite

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S&P 500 in Bloodbath as Softer Earnings, Rate-Hike Jitters Bite
Credit: © Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 fell sharply Friday, weighed down by mostly disappointing quarterly earnings from corporates and rising bets on even more aggressive Federal Reserve monetary policy tightening ahead.

The S&P 500 fell 2.5%, the Dow Jones Industrial Average slipped 2.4%, or 848 points, the Nasdaq fell 2.3%.

Health care was one of the worst performing sectors on the day, pressuring the broader market paced by a slump in HCA and Intuitive Surgical.

HCA Holdings (NYSE: HCA ) fell more than 20% after reporting mixed quarterly results and cutting its full-year guidance following the impact of the pandemic and rising costs.

Intuitive Surgical (NASDAQ: ISRG ) fell more than 14% as its better-than-expected first-quarter results were overshadowed by “the lack of follow-through on the procedure guide and the commentary around a potentially softer U.S. capital pipeline,” Raymond (NS: RYMD ) James said as it cut its price target on the stock to $330 from $334.

Sentiment on stocks was also soured by expectations that the Federal Reserve is set for an even tighter path of monetary policy following hawkish remarks from Chairman Jerome Powell a day earlier.

Powell on Wednesday said that a 50 basis-points hike was on the table for the May meeting, and added that the central bank was open to front-loading more than one 50 basis point hike beyond the May meeting.

“The market was already anticipating a 50bps hike next month. Going forward, however, against the backdrop of this week’s Fed commentary, an even larger 75bp hike is now on the table,” Stifel said in note.

The 10-year Treasury yield briefly rose to its highest since 2018, before giving up gains. While the 2-year Treasury yield, which is more sensitive to the Fed’s rate hikes, continued to advance.  

Against the backdrop of rising rates, the enemy of growth stocks, tech continued to trade in the red. 

Google-parent Alphabet (NASDAQ: GOOGL ), Amazon (NASDAQ: AMZN ), Microsoft  (NASDAQ: MSFT ), Apple (NASDAQ: AAPL ) and Meta (NASDAQ: FB ) were down more than 1%.

Communication services were also the big drag on the broader market after Verizon Communications (NYSE: VZ ) suffered its biggest drop in more than two years. The telecoms giant cut its full-year sales forecast.

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