Dow ends weak week deep in the red
A stronger US dollar and rising oil prices: For experts, these are signs of increasing uncertainty on the markets.
The US stock markets ended a weak week with significant losses. Disappointing quarterly reports from some technology groups clouded the recently brightened mood among investors on Friday.
The volatility on the stock exchanges remains high, said market expert Jim Reid from Deutsche Bank and referred, among other things, to the recently strengthened US dollar and rising oil prices as an expression of the increasing uncertainty.
US leading index: lowest level since mid-March
The Dow Jones Industrial faltered steadily in the course of trading and accelerated its descent in the closing trade. Ultimately, there was a drop of 2.77 percent to 32,977.21 points, the lowest level since mid-March. This resulted in a weekly loss of around 2.5 percent for the leading US index. For the month of April, the Dow’s balance sheet reads even bleaker at around minus 5 percent.
The market-wide S&P 500 lost 3.63 percent on Friday to 4131.93 points. The Nasdaq 100 fell 4.47 percent to 12,854.80 points, its lowest level in more than a year. The tech-heavy index fell more than 13 percent in April, its worst monthly performance since the financial crisis of 2008.
US consumer sentiment is improving only slowly
Fresh US economic data had little impact on prices. US consumer sentiment did not improve quite as much as expected in April. The consumer climate survey by the University of Michigan rose by 5.8 points to 65.2 points compared to the previous month. US consumer spending increased significantly in March. The labor cost index climbed 1.4 percent quarter-on-quarter in the first quarter.
A disappointing quarterly report from Amazon caused the price to fall by more than 14 percent. High costs caused the operating profit of the online trading group to collapse by 58 percent. The outlook for the current quarter was also considered a burden. Analysts lowered their price targets one after another, but many of them did not want to overstate the news in anticipation of a better second half of the year.
Disappointing prospects for tech giants
Other tech giants like Apple and Intel lost 3.7 and 6.9 percent respectively because of disappointing prospects. Although the iPhone manufacturer exceeded expectations with its quarterly report, it warned of stronger headwinds. Apple could lose up to $8 billion in sales in the current quarter, mainly because of lockdowns in Shanghai. At the processor manufacturer Intel, it was considered a burden that sales are falling together with the shrinking PC market.
Outside the tech sector, too, there were increasingly negative price reactions after quarterly reports on Friday. The shares of the oil company Chevron were traded 3.2 percent lower despite the rising oil prices. The competitor ExxonMobil posted a minus of 2.2 percent.
Losing shares in Tesla
Colgate-Palmolive was down more than 5 percent. High raw material and transport costs made things difficult for the consumer goods manufacturer in the first quarter. Dow-listed Honeywell shares were a positive exception, up 1.9 percent after an elevated sales and earnings outlook.
Tesla’s shares ultimately lost 0.8 percent after Elon Musk – founder and boss of the electric car manufacturer – announced that he was not planning any further sales of Tesla shares. Musk sold $8.4 billion of Tesla stock last week. In the fall, the richest man in the world had already sold Tesla shares for more than $16 billion. Musk had recently announced that he wanted to take over the short message service Twitter and had presented financing commitments of over 46.5 billion dollars.
After the recent slide, the euro continued to gain ground in US trades, last trading at $1.0547. The European Central Bank had set the reference rate at 1.0540 (Thursday 1.0485) dollars. The dollar had thus cost 0.9487 (0.9537) euros.
US Treasuries continued their recent slide. The futures contract for ten-year Treasuries (T-Note Future) recently fell by 0.37 percent to 118.92 points. The yield on ten-year government bonds rose to 2.92 percent.