Stocks, oil and cryptocurrencies fell as investors grappled with the prospect of higher interest rates and disappointing results from popular consumer tech stocks.
The S&P 500 fell 0.4%, pointing to an extension of Thursday’s drop, when the index closed down 1.1%. The Nasdaq Composite declined 0.7%, and the Dow Jones Industrial Average traded flatly, most recently down less than 0.1%.
Investors’ increasing conviction that the Federal Reserve will have to raise interest rates several times this year to combat inflation has pressured stocks. Last week, Fed Chairman Jerome Powell called rapid inflation a “severe threat” to a full economic recovery, and data showed consumer prices soaring 7% on the year in December.
This has hit growth stocks and put the Nasdaq in correction territory, as investors are dumping shares of unprofitable companies. Tensions between Russia and NATO are also weighing on market sentiment, investors said. The S&P 500 is on track for its worst weekly performance since Oct. 2020.
Japan’s Nikkei 225 index shed 0.9% Friday.
Photo:
behrouz mehri/Agence France-Presse/Getty Images
shares plunged 23% after the company said it expected a slowdown in subscriber growth.
rose 4.5%, recouping some losses after the stock tumbled nearly 24% Thursday on reports that the connected-fitness company was halting production. Its chief executive refuted these claims.
“As we return to a more normal world, names like Peloton and Netflix being weaker or disappointing isn’t a surprise,” said
Arun Sai,
a multiasset strategist at Pictet Asset Management. “I think when the dust settles, we’ll have a reasonable set of numbers in Q4 earnings. Peloton and Netflix are more of a distraction than anything else.”
Investors’ bets on faster rate increases have driven up inflation-linked bond yields, seen as a benchmark for financing costs. The yield on the 10-year Treasury inflation-protected security rose as high as minus 0.526% Friday, the highest level since June 2020, before easing slightly to minus 0.557%. The yield on the benchmark 10-year Treasury note edged down to 1.761% from 1.833% Thursday.
“Geopolitical risk plays a role, repricing of [central bank] policy plays a role and the inflation mix in the sense of cost pressures. You put all those together and there is actually quite a change,” said
Georgina Taylor,
a multiasset fund manager at Invesco. “Risk premium for equities needs to go up.”
Cryptocurrencies tumbled, with bitcoin losing 7.1% compared with its level at 5 p.m. ET Thursday, trading around $38,400. Ether fell 9.5%.
Oil prices also declined. Global benchmark Brent crude fell 1%, trading at $87.48 a barrel, weighed down by a surprise increase in U.S. crude stockpiles, according to analysts at RBC Capital Markets.
Overseas, U.S.-listed shares of wind-power company
Siemens Gamesa Renewable Energy
fell 13% after it posted an operating loss and lowered its guidance, citing supply-chain constraints. Shares of some Chinese drugmakers surged after they were selected to help make cheaper versions of Merck’s Covid-19 pill.
BrightGene Bio-Medical Technology
rose 20%, and
advanced 14%.
Shares in Asia-Pacific and Europe broadly retreated. The pan-continental Stoxx Europe 600 fell 2%, while China’s Shanghai Composite Index and Japan’s Nikkei 225 declined 0.9%.
Write to Dave Sebastian at dave.sebastian@wsj.com and Anna Hirtenstein at anna.hirtenstein@wsj.com
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