It was not a good week for U.S. stocks as the major indexes suffered weekly declines following what decsribed as a disappointing quarterly earnings from corporates and growing worries about aggressive Federal Reserve rate hikes.
The New York Stock Exchange (NYSE) All Share Index (ASI) lost 2.75% for the week, as it opened, trading at 16,511.5 basis points and it closed the week trading at 16,047.5 basis points. What looked to be a bullish outlook at the beginning of the week, turned out to be a bearish performance, with majority of the losses, coming on the last trading day, representing a 2.68% decline.
The NASDAQ posted its 3rd week of decline, losing 3.83% during the week under consideration. It started at a basis point of 13,319.39 and ended the week at 12,839.29 basis points. The last two weeks show a decline in the volume of transaction as the market posted volumes below a billion. The last time the NASDAQ posted volumes below a billion was December 2012.
The Dow Jones and the S&P 500 also posted declines, 1.85% and 2.75% respectively. The Dow Jones suffered its worst decline of the year on Friday, losing 2.81% on the day.
What’s Moving the Market?
Sentiment on stocks was soured by expectations that the Federal Reserve is set for an even tighter path of monetary policy following hawkish remarks from Chairman Jerome Powell.
As previously mentioned, the stance of the U.S. Fed is the major driver of the performance of the U.S. market as Fed Chair Jerome 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.
Stifel said in note that, “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.”
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.
The week under consideration, we saw Netflix’s share price lose 36.82% to close the week trading $215.52 per share. The massive decline was as a result of the company’s first Quarter 2022 report, which revealed that the firm lost approximately 200,000 subscribers in the quarter, when it was projected to 2.5 million subscribers.
This is the first time Netflix is recording a decline in the number of subscribers in over 10 years. In its shareholder letter, it also explained that they expect to lose another 2 million subscribers in the second quarter of 2022.
Asides Netflix, we saw other tech companies like Google-parent Alphabet, Amazon, Microsoft, Apple and Meta lose more than 2%. Communication services were also the big drag on the broader market after Verizon Communications suffered its biggest drop in more than two years. The telecoms giant cut its full-year sales forecast.
In other news, Bed Bath & Beyond Inc jumped more than 6% on reports that the company is fielding interest for its BuyBuy Baby business.
List of Top 5 Gainers
Although the U.S. markets performed poorly, there are still some notable gainers for the week. They include:
- Checkmate Pharmaceuticals Inc (CMPI) 309.06%
- Cyngn Inc (CYN) 133.91%
- Vallon Pharmaceuticals Inc (VLON) 69.40%
- Swvl Holdings Corp Cl A (SWVL) 45.72%
- Blueknight Energy LP (BKEP) 38.60%
- The top 5 losers include;
- Arqit Quantum Inc (ARQQ) -47.88%
- Diffusion Pharmaceuticals Inc (DFFN) -43.64%
- Dogness Corp Cl A (DOGZ) -42.93%
- Nutex Health Inc (NUTX) -37.12%
- Netflix Inc (NFLX) -36.82