U.S. stocks fell on Friday, extending losses from earlier in the week and putting the S&P 500 on the cusp of a bear market. The relentless selling has the Dow Jones Jones Industrial Average on pace for its eighth negative week in a row.
The S&P 500 traded about 0.8% lower, putting it more than 19% below its record reached in January. A 20% decline would mark the first bear market since the March 2020 pandemic decline. The Dow fell 225 points, or 0.7%, with the benchmark losing steam after a strong open. The Nasdaq Composite dipped 0.9%.
For the week, the Dow is off by 3.7% for what would be its first 8-week losing streak since 1923. The S&P 500 and Nasdaq are down about 4% apiece on the week, with both on pace to fall for a seventh-straight week.
“This has probably been one of the most volatile starts to a year where a move in either direction has been at least 1% for the S&P 500 more often than it hasn’t been. That’s not normal kind of volatility to start with,” said Art Hogan, chief market strategist at National Securities.
“The difficult part of that is, because markets are so volatile in both directions, it takes away most of the liquidity. Nobody wants to stand in the way of the market when it picks a direction, so that tends to exacerbate the moves,” he said.
Stocks were under pressure again Friday as concerns of rising interest rates and an aggressive stance against inflation by the Federal Reserve had investors worried the economy could fall into a recession.
Wall Street dumped shares of semiconductor stocks Friday. Shares of Nvidia fell 5%, Advanced Micro Devices declined 4%, and Marvell Technology slipped more than 2%.
Bank stocks also declined. Shares of JPMorgan Chase dropped 1% and Bank of America fell nearly 2%.
Elsewhere, shares of Deere also fell 7% on Friday after the heavy equipment maker reported a revenue miss. However, the company beat on earnings estimates and raised its annual profit outlook. Shares of Caterpillar also declined more than 3%.
Retailers also continued to get hit this week after the most recent quarterly figures from Walmart and Target raised concerns about a weakening consumer base and the ability for companies to deal with decades-high inflation. Target and Walmart are down sharply after posting their quarterly results this week.
Ross Stores was the latest retailer to fall after posting earnings. The stock was down 20%. CEO Barbara Rentler said that “following a stronger-than-planned start early in the period, sales underperformed over the balance of the quarter.”
“While many cross-currents are causing the current sell-off, the proximate cause of the recent acceleration in the stock declines revolves around fears about the U.S. consumer,” Glenview Trust CIO Bill Stone wrote. “For the first time in the post-Covid period, retailers have been stuck with some excess inventories. Costs due to inflation are also taking their toll on their earnings.”
“Lastly, there is evidence that the lower-end consumer is feeling the pinch from the increase in prices,” Stone said.
Meanwhile, the Federal Reserve has signaled it will continue to raise interest rates as it tries to temper the recent inflationary surge. Earlier in the week, Chair Jerome Powell said: “If that involves moving past broadly understood levels of neutral, we won’t hesitate to do that.”
That tough stance on monetary policy has stoked concern this week that the Fed’s actions could tip the economy into a recession. On Thursday, Deutsche Bank said the S&P 500 could fall to 3,000 if there is an imminent recession. That’s 23% below Thursday’s close.
Stocks have struggled to find their footing for roughly two months. The Nasdaq is 27% below its record and the Dow is off by 14% from its high.
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Correction: The Dow was on pace for its first eight-week losing streak since 1923. A previous version misstated the year.