U.S. Stocks See Further Downside After Early Pullback

After coming under pressure early in the session, stocks have seen further downside over the course of the trading day on Friday. With the sell-off on the day, the major averages have largely offset the substantial rally seen in the previous session.

Currently, the major averages are lingering near their worst levels of the day. The Dow is down 556.75 points or 1.6 percent at 33,359.64, the Nasdaq is down 324.45 points or 2.5 percent at 12,547.08 and the S&P 500 is down 98.53 points or 2.3 percent at 4,188.97.

A negative reaction to the latest batch of earnings news has contributed to the sharp pullback on Wall Street, with shares of Amazon (AMZN) plunging by 13.2 percent to their lowest intraday level in almost two years.

The steep drop by Amazon comes after the online retail giant reported an unexpected first quarter loss and provided disappointing revenue guidance for the current quarter.

Semiconductor giant Intel (INTC) has also tumbled by 6.2 percent after reporting first quarter results that exceeded analyst estimates but issuing weak guidance for the second quarter.

Shares of Apple (AAPL) have also moved to the downside after the tech giant reported better than expected fiscal second quarter earnings but warned supply chain issues would hurt third quarter sales by as much as $8 billion.

The sell-off on Wall Street may also reflect traders moving money out of stocks ahead next week’s Federal Reserve meeting, with the central bank widely expected to raise interest rates by 50 basis points.

On the U.S. economic front, a report released by the Commerce Department showed U.S. personal income increased by slightly more than expected in the month of March, while U.S. personal spending jumped by much more than anticipated.

The Commerce Department said personal income rose by 0.5 percent in March after climbing by an upwardly revised 0.7 percent in February.

Economists had expected personal income to rise by 0.4 percent compared to the 0.5 percent increase originally reported for the previous month.

The report also showed personal spending jumped by 1.1 percent in March after advancing by an upwardly revised 0.6 percent in February.

Personal spending was expected to increase by 0.7 percent compared to the 0.2 percent uptick originally reported for the previous month.

Meanwhile, a reading on inflation said to be preferred by the Fed showed the annual rate of core consumer price growth slowed to 5.2 percent in March from 5.3 percent in February.

Sector News

Retail stocks continue to see substantial weakness amid the steep drop by Amazon, with the Dow Jones U.S. Retail Index plunging by 6.7 percent to its lowest intraday level in over a year.

Significant weakness also remains visible among telecom stocks, as reflected by the 3.2 percent nosedive by the NYSE Arca North American Telecom Index. The index has fallen to a one-month intraday low.

Intel has also helped lead the semiconductor sector lower, resulting in a 2.9 percent slump by the Philadelphia Semiconductor Index.

Commercial real estate, networking and utilities stocks have also shown notable moves to the downside amid broad based selling pressure on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Friday, with the Japanese markets closed for a holiday. China’s Shanghai Composite Index shot up by 2.4 percent, while Hong Kong’s Hang Seng Index soared by 4 percent.

The major European markets have also moved to the upside on the day. While the German DAX Index advanced by 0.8 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index rose by 0.5 percent and 0.4 percent, respectively.

In the bond market, treasuries are firmly negative after failed recovery attempt early in the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 3.8 basis points at 2.901 percent.

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