US indexes dropped sharply on Thursday, erasing all gains made early on during the session. The slump was triggered by a massive sell-off of US Treasury bonds. Losses in the oil & gas, technology, and basic materials sectors propelled shares lower.
Stock movers
The Dow Jones Industrial Average lost 1.05% and fell to 34,792.76 points. On the DJIA, the best performing stocks were Dow Inc (+2.92%), International Business Machines (+1.11%), and Verizon Communications Inc (+1.10%). The worst performing stocks were Salesforce.com Inc (-4.83%), Chevron Corp (-4.61%), and Walt Disney Company (-2.34%). The S&P 500 decreased by 1.48% to 4393,66 points. On the S&P 500, the top performers were United Airlines Holdings Inc (+9.31%), and American Airlines Group (+3.80%). The worst performers were Enphase Energy Inc (-12.31%) and SolarEdge Technologies Inc (-9.75%). The NASDAQ Composite slid down by 2.07% to 13,174.65 points. On the NASDAQ Composite, the biggest winners of the session were Cyngn Inc (+96.30%), Swvl Holdings Corp (+47.89%), and Revelation Biosciences Inc (+23.08%). The biggest losers included Voyager Therapeutics Inc (-28.15%), GWG Holdings Inc (-27.80%), and Elys Game Technology Corp (-23.04%).
Shares of Netflix Inc continued to decline after the company released disappointing first-quarter reports on Wednesday. The stock lost 3.5% on Thursday after Pershing Square sold its stake in the streaming giant. The market capitalization of Freeport-McMoRan Copper and Gold Inc dived by 10%, despite the company posting strong Q1 results. In the first quarter of 2022, the company's net income more than doubled. The adjusted earnings per share and earnings also exceeded market forecasts. However, the quote came under pressure from worsening outlooks for copper in 2022. Shares of Xerox Holdings Corp slumped by 15.7%. The company has not changed its outlook for 2022, despite reporting losses in the first quarter. Union Pacific Corp. lost 1.1.%, despite increased net income and revenues in Q1 2022. Shares of Tesla Inc. increased by 3.2% on Thursday. The automaker's revenues surged by 81% in the first quarter, greatly exceeding market expectations. The net income of Tesla increased to $3.32 billion, well above the forecasted $2.2 billion. AT&T gained 4.1%. Revenues of the world's biggest telecommunications company decreased by 36% in Q1 2022. However, adjusted earnings per share exceeded expectations of investors. Shares of American Airlines Group rose by 3.8%, despite the company's net loss increasing by 31% in the first quarter of 2022. The airline expects to turn profitable in the ongoing quarter. Philip Morris International increased by 2%, thanks to its adjusted earnings and revenues exceeding market expectations.
On the NYSE, declining stocks outnumbered rising ones by 2,508 to 617, while 119 ended unchanged. On the Nasdaq Stock Exchange, 2,991 stocks fell and 897 advanced, while 194 ended unchanged. The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 11.61% to 22.68.
Growth and decline factors
The US stock market advanced early, thanks to positive earning reports. Despite monetary tightening, the highest inflation rate in decades, and persistent price growth, US companies managed to advance in the first quarter. However, investors became increasingly wary over the expected Fed interest rate hike on Thursday. Earlier, Fed chairman Jerome Powell signaled that the Fed would hike the rate by 0.5% at its next meeting on May 3. The yield of 10-year US Treasury bonds jumped to 2.917% on Thursday, reaching the highest level since the winter of 2018. On Wednesday, the 10-year yield was at 2.836%. As the yield of US Treasuries rises, equities decline - growing interest rates make bonds more attractive to investors compared to risky assets. However, many market experts are sure that the US stock market has upside potential thanks to the good state of the US economy. According to financial data provider FactSet, 12% of companies on the S&P 500 have already published their first-quarter results. 80% of these reports exceeded market expectations. This indicates that earnings of key US companies remains steady, despite negative macroeconomic factors like geopolitical tensions in Eastern Europe, inflation, and lockdowns in China. The US stock market also found support in US data releases. According to the US Labor Department, the number of initial jobless claims decreased to 186,000 from 184,000 the week before. Economists expected jobless claims to fall to 185,000.
