Stock market today: Tumbling tech stocks drag Wall Street to the finish line of another losing week

By Stan Choe, The Associated Press on April 19, 2024.

NEW YORK (AP) – The worst week for big technology stocks since the COVID crash in 2020 dragged Wall Street across the finish line of another losing week. The S&P 500 fell 0.9% Friday to close out its third straight losing week. The Nasdaq composite tumbled 2%. The Dow Jones Industrial Average, which has less of an emphasis on tech, was an outlier and rose 0.6%. The market’s worst performers included several stocks that had been its biggest stars. Super Micro Computer lost more than a fifth of its value. Nvidia was the single heaviest weight on the S&P 500.

THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.

NEW YORK (AP) – One of the worst weeks for big technology stocks since the COVID crash in 2020 is dragging Wall Street on Friday to the finish line of its latest losing week.

The S&P 500 was down 1% in late trading and on track for its third straight losing week. That would be its longest such streak since September, before it broke into a romp that sent it to a string of records this year.

The Nasdaq composite was down 2.2%, as of 3 p.m. Eastern time. The Dow Jones Industrial Average, which has less of an emphasis on tech, was an outlier and up 134 points, or 0.4%.

The stock market’s worst performers included several stocks that until recently had been its biggest stars. Super Micro Computer lost more than a fifth of its value, dropping 22.2%. The company, which sells server and storage systems used in AI and other computing, had soared 226% for the year coming into the day.

Nvidia, another stock that has been surging due to Wall Street’s frenzy around artificial-intelligence technology, also gave up some of its big recent gains and slumped 8.7%. Because of its huge size, it was the heaviest single weight on the S&P 500.

Tech stocks in the S&P 500 have broadly lost 7% this week as a dawning, dispiriting acknowledgement sweeps Wall Street that interest rates will stay high for longer.

Top Fed officials said this week that they could hold interest rates at their high level for a while. That’s a letdown for traders after the Fed had signaled earlier that three cuts to interest rates could be possible this year. High rates hurt prices for investments, particularly those seen as the most expensive and making investors wait the longest for big growth, and raise the risk of a recession.

Lower rates had earlier appeared to be on the horizon after inflation cooled sharply last year. But a string of reports this year showing inflation has remained hotter than expected has raised worries about stalled progress.

Fed officials are adamant that they want to see additional proof inflation is heading down toward their 2% target before lowering the Fed’s main interest rate, which is at its highest level since 2001.

Traders are now largely forecasting just one or two cuts to rates this year, according to data from CME Group, down from expectations for six or more at the start of the year. A growing number are expecting zero cuts this year.

But Brian Jacobsen, chief economist at Annex Wealth Management, expects inflation to moderate as U.S. households that have become “hypersensitive to price hikes” by businesses begin slowing their spending.

“The giant sucking sound of optimism (escaping) from the market is due to the Fed’s lack of foresight and irrational focus on where inflation has been instead of where it’s going,” he said.

Because interest rates look unlikely to offer much help in the near term, companies are under even more pressure to deliver growth in profits, the other lever that helps set stock prices

Netflix sank 9% despite reporting stronger profits for the latest quarter than expected. Analysts called it a mostly solid performance, but the streaming giant disappointed some investors by saying it will stop giving updates on its subscriber numbers every three months, beginning next year.

Helping to limit the market’s losses was American Express, which rose 5.4%. It reported stronger profit for the latest quarter than analysts expected. Fifth Third Bancorp rose 5.5% after it likewise topped expectations.

In the oil market, a barrel of Brent crude pulled back to $87.29 after briefly leaping above $90 overnight on worries about fighting in the Middle East. Iranian troops fired air defenses at a major air base and a nuclear site during an apparent Israeli drone attack, raising worries in the market. But crude prices pared their big gains as traders questioned how Iran would respond.

In the bond market, the yield on the 10-year Treasury eased to 4.61% from 4.64% late Thursday to trim its gain for the week. It had been down more overnight, when worries were spiking about a potentially broadening war in the Middle East, but it pared its losses as the day progressed.

In markets abroad, stock indexes were mixed in Europe after falling more sharply in Asia.

Japan’s Nikkei 225 lost 2.7%. A report said the country’s inflation rate slowed in March, and investors are waiting for the Bank of Japan’s next move after it raised its benchmark interest rate last month for the first time in 17 years.

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AP Writers Matt Ott and Zimo Zhong contributed.

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