US stocks fell Friday, with the S&P 500 on track to close in bear market territory, extending recent losses that have major indices on track for their longest run of weekly declines in more than two decades.
The S&P 500 recently fell 1.6% after narrowly avoiding entering a bear market during a choppy trading session on Thursday, or a 20% drop since its last peak. The Dow Jones Industrial Average fell 1.3%, while the Nasdaq Composite lost 2.3%.
The S&P 500 and Nasdaq are on track for their seventh consecutive weekly loss, their longest loss streak since 2001, according to Dow Jones Market Data. The Dow is on track for an eighth consecutive weekly decline, the longest run since 1932. All three indices were recently on track to finish the week at least 4%.
Markets have been gripped by fears for the health of the US and the global economy. Technology stocks started the week higher but fell in the following days as investors worried about how far the Federal Reserve will go to curb inflation, selling the most expensive stocks in the stock market.
The pain spread beyond the technology sector. Major retailers reported profits were hurt by rising costs and supply chain disruptions, triggering a sell-off that led to Target and Walmart‘s
worst one-day drop since the Black Monday crash of 1987.
Shares got a short reprieve on Friday and opened higher after China’s central bank cut an interest rate that serves as a benchmark for mortgages. But the markets then erased all their morning gains within a few hours. Investors and analysts expect tighter financial conditions in the US to continue to put pressure on markets in the coming weeks.
“We still need to gather more evidence to convince the markets that a soft landing is possible,” said Arun Sai, a multi-asset strategist at Pictet Asset Management, referring to the Fed’s goal of slowing the economy enough to control inflation, but not so much that it triggers a recession.
Government bond prices rose, benefiting from investors flocking to assets that do well in times of economic stress. The yield on the 10-year Treasury benchmark fell to 2.817% on Friday, from 2.854% on Thursday, en route to a third consecutive day of declines. Prices rise when yields fall.
Profits on Friday caused fluctuations between individual stocks.
Shares of Ross Stores fell 22% after it posted a decline in sales and said it expects another decline this quarter. The retailer, like many other companies, said its results were hurt by rising transportation and labor costs.
Farm equipment manufacturer Deere fell 12%, although it posted higher sales and profits on strong demand. The chief executive said supply chain problems were disrupting production levels and deliveries.
Meanwhile, Foot Locker rose 3.2% after its chief financial officer said he expects the retailer’s full-year profit to be at the top of expectations.
Palo Alto Networks added 8.4% after the cybersecurity firm reported quarterly revenue that exceeded analyst expectations.
For the most part, earnings from the S&P 500 companies have come in better than analysts had expected, said Kiran Ganesh, a multi-asset strategist at UBS.
“The question is from next quarter where we will have the full impact of the jump in oil prices and the war in Ukraine,” Mr Ganesh said.
Abroad, the Stoxx Europe 600 added 1.5%. Asian stocks also rose, with the Shanghai Composite climbing 1.6% and the Hang Seng in Hong Kong up 3%.
A trader worked on the floor on the New York Stock Exchange on Thursday.
Photo:
Seth Wenig/Associated Press
Write to Anna Hirtenstein at anna.hirtenstein@wsj.com and Akane Otani at akane.otani@wsj.com
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