Wall Street closes sharply lower on Amazon slump, inflation worries

·3 min read

By Bansari Mayur Kamdar and Noel Randewich

(Reuters) - Wall Street slid on Friday to its deepest daily losses since 2020, as Amazon slumped following a gloomy quarterly report, and as the biggest surge in monthly inflation since 2005 spooked investors already worried about rising interest rates.

Amazon.com Inc tumbled 14.05% in its steepest one-day drop since 2006, leaving the widely held stock near two-year lows. Late on Thursday, the e-commerce giant delivered a disappointing quarter and outlook, swamped by higher costs.

Apple Inc, the world's most valuable company, dropped 3.66% after its disappointing outlook overshadowed record quarterly profit and sales.

All 11 S&P 500 sector indexes fell, led lower by a 5.9% slide in Consumer Discretionary and a 4.9% drop in Real Estate.

The S&P 500 logged it largest one-day decline since June 2020. The Nasdaq's decline was its largest since September 2020.

Downbeat results and worries about aggressive monetary policy tightening by the Federal Reserve have hammered megacap technology and growth stocks this month.

The Fed is set to meet next week, with traders betting on a 50-basis-point rate hike to combat surging inflation.

Ahead of the weekend and the Fed meeting next week, "people are clearing the decks. The disappointing guidance from Apple and Amazon and a few other companies set the stage yesterday for today to be weak and it accelerated as we ended out the day," said Peter Tuz, President of Chase Investment Counsel in Charlottesville, Virginia.

The Nasdaq has lost about 13% in April, its worst monthly performance since the global financial crisis in 2008.

The S&P 500 has fallen 13% so far in 2022, its steepest four-month decline to start any year since 1939.

Adding to fears on Wall Street, data showed the personal consumption expenditures price index - the Fed's favored measure of inflation - shot up 0.9% in March after climbing 0.5% in February.

Signs of aggressive monetary policy tightening, the Ukraine war and China's COVID lockdowns have fueled fears of an economic slowdown. Data on Thursday showed the U.S. economy unexpectedly contracted in the first quarter.

The, S&P 500 declined 3.63% to end the session at 4,131.93 points.

The Nasdaq declined 4.17% to 12,334.64 points, while Dow Jones Industrial Average declined 2.77% to 32,977.21 points.

For the week, the S&P 500 lost 3.3%, the Nasdaq shed 3.9% and the Dow declined 2.5%.

GRAPHIC: S&P 500's busiest trades https://fingfx.thomsonreuters.com/gfx/mkt/gkvlgkajxpb/SPX_by_busiest_trades.png

The S&P 500 has gained or lost 2% or more in a day some 33 times so far in 2022, compared to 24 such days in all of 2021.

Exxon Mobil Corp slipped 2.24% after it took a $3.4 billion writedown due to its exit from Russia. Chevron Corp dropped 3.16% after its first-quarter profit underwhelmed.

The first-quarter earnings season overall has been better than expected so far. Nearly half of the S&P 500 companies have reported through Thursday and 81% of them have topped Wall Street's expectations. Typically, only 66% beat estimates, according to Refinitiv data.

Declining issues outnumbered advancing ones on the NYSE by a 3.91-to-1 ratio; on Nasdaq, a 2.85-to-1 ratio favored decliners.

The S&P 500 posted 2 new 52-week highs and 47 new lows; the Nasdaq Composite recorded 13 new highs and 385 new lows.

Volume on U.S. exchanges was 12.4 billion shares, compared with an 11.8 billion average over the last 20 trading days.

(This story corrects 10th paragraph to show S&P 500 YTD decline comparable to 1939, not 1932)

(Reporting by Bansari Mayur Kamdar and Devik Jain in Bengaluru and by Noel Randewich in Oakland, Calif.; Editing by Arun Koyyur, Aditya Soni and David Gregorio)

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