Wall Street ended mixed on Friday after a volatile session that saw Tesla slump and other growth stocks also lose ground.
The S&P 500 and the Nasdaq logged their seventh straight week of losses, their longest losing streak since the end of the dotcom bubble in 2001.
The Dow suffered its eighth consecutive weekly decline, its longest since 1932 during the Great Depression.
Canada’s TSX ended slightly higher after a last-minute rally brought the index out of the red.
Worries about surging inflation and rising interest rates have pummeled the U.S. stock market this year, with danger signals from Walmart Inc and other retailers this week adding to fears about the economy.
The S&P 500 spent most of the session in negative territory and at one point was down just over 20% from its Jan. 3 record high close before ending down 18% from that level and flat for the day.
Closing down 20% from that record level would confirm the S&P 500 has been in a bear market since reaching that January high, according to a common definition.
The tech-heavy Nasdaq was last down about 27% from its record close in November 2021.
Weighing heavily on the S&P 500, Tesla tumbled 6.4% after Chief Executive Elon Musk denounced as “utterly untrue” claims in a news report that he sexually harassed a flight attendant on a private jet in 2016.
Other megacap stocks also fell, with Apple Google-owner Alphabet Inc down 1.3% and Nvidia losing 2.5%.
Shares of Deere & Co dropped 14% after the heavy equipment maker posted downbeat quarterly revenue.
Pfizer rose 3.6%, helping the S&P 500 avoid a loss for the day.
Recent disappointing forecasts from big retailers Walmart, Kohl’s Corp and Target Inc have rattled market sentiment, adding to evidence that rising prices have started to hurt the purchasing power of U.S. consumers.
On Friday, Ross Stores plunged 22.5% after the discount apparel retailer cut its 2022 forecasts for sales and profit, while Vans brand owner VF Corp gained 6.1% on strong 2023 revenue outlook.
The S&P/TSX composite index closed up 15.69 points to 20,197.61 after losing as much as almost 245 points in earlier trading. It was up less than 100 points for the week but off 9.1 per cent from its recent high.
Tech pared its losses Friday but still closed lower on the day as shares of Shopify Inc. decreased 7.1 per cent.
Health care was the biggest laggard on the TSX, falling 2.3 per cent as Canopy Growth Corp. decreased 5.6 per cent.
Materials, which includes metals companies, forestry producers and fertilizer firms, was the second-weakest sector on the TSX, losing almost one per cent as Nutrien Inc. decreased 4.1 per cent.
The S&P 500 edged up 0.01% to end the session at 3,901.36 points.
The Nasdaq declined 0.30% to 11,354.62 points, while the Dow Jones Industrial Average rose 0.03% to 31,261.90 points.
For the week, the S&P 500 fell 3.0%, the Dow lost 2.9% and the Nasdaq declined 3.8%.
About two thirds of S&P 500 stocks are down 20% or more from their 52-week highs.
Volume on U.S. exchanges was 13.0 billion shares, compared with a 13.5 billion average over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.16-to-1 ratio; on Nasdaq, a 1.24-to-1 ratio favored decliners. The S&P 500 posted 1 new 52-week highs and 48 new lows; the Nasdaq Composite recorded 11 new highs and 353 new lows.
U.S. Treasury yields fell for a third straight session on Friday, with benchmark 10-year yields hitting fresh three-week lows, as investors grew concerned about increasing signs of an economic slowdown even as the Federal Reserve vowed to stay aggressive with monetary tightening.
“The chance of recession is growing but the Fed doesn’t respond by backing off,” said Jim Vogel, senior rates strategist, at FHN Financial in Memphis, Tennessee.
He added that he expects inflation to remain high for the rest of the decade.
Fed funds futures were firmer, suggesting that the U.S. rate market has pulled back a bit from some of its more extreme rate hike estimates on the view that the Fed may have to scale back on its tightening plan, involving multiple 50 basis-point increases, as the economy slows down.
The rates market on Friday had priced in a fed funds rate of 2.783% at the end of next year, compared with the current level of 0.83%. That was as high as 2.9% two weeks ago.
BofA Securities, in its latest research note, said there had been a “market sea change in rate views” over the last two weeks. It reaffirmed its call last month of going long duration when the 10-year yield was between 2.8%-2.85%.
The U.S. bank cited several factors such as yields having overshot fundamentals, Fed pricing looking full, growth and inflation easing and signs of an economic slowdown in surveys.
In afternoon trading, the benchmark U.S. 10-year yield fell 7.4 basis points to 2.7811%, after earlier touching 2.774%, a three-week trough.
Friday brought little action in terms of U.S. economic data and events, but next week should be hectic.
The minutes of the last Federal Open Market Committee meeting are due for release on Wednesday, while Kansas City Fed President Esther George, a voter on this year’s FOMC, and Atlanta Fed President Raphael Bostic are scheduled to speak next week.
“Wednesday’s FOMC minutes release carries with it a meaningful amount of event-risk; most of it hawkish,” wrote BMO Capital in a research note.
“Within this discussion, we cannot help but assume there were those more hawkishly-minded advocating for a 75 basis-point hike if not 100 bps. It’s those headlines that will presumably define the initial reaction to the minutes release.”
There is data as well such as U.S. new home sales, durables, revised gross domestic product for the first quarter, as well personal income and consumption.
Canadian bond yields fell across the curve in a shortened session ahead of the Victoria Day holiday on Monday. The 10-year was down 5 basis points at 2.832%, trading near a three-week low.
The June gold contract was up 90 cents at US$1,842.10 an ounce and the July copper contract was down nearly one cent at US$4.28 a pound.
Energy was up for the day as crude oil prices inched higher to help Imperial Oil shares gain 2.4 per cent.
The July crude contract was up 39 cents at US$110.28 per barrel and the June natural gas contract was down 22.5 cents at US$8.08 per mmBTU.
The Canadian dollar traded for 77.95 cents US compared with 78.07 cents US on Thursday.
Reuters, The Canadian Press, Globe staff
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