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US stock sell-off deepens as Nasdaq falls nearly 3% on fears of higher rates and weak tech results

Traders work on the floor of the New York Stock Exchange (NYSE)

Spencer Platt/Getty Images

  • US stocks tumbled Friday as investors continued to fret over rates and digested disappointing earnings.
  • Netflix fell over 20% after its earnings report delivered a weak outlook for subscriber growth. 
  • Cryptocurrencies, oil, and gold prices all slipped. 
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

US stocks tumbled on Friday as investors continue to worry about a hawkish Federal Reserve, interest rate hikes, rising inflation, and disappointing earnings, particularly from mega-cap technology firms. 

The tech-heavy Nasdaq Composite — which entered correction territory midweek — tumbled further, dragged by streaming giant Netflix. The Dow Jones Industrial Average slipped more than 300, breaking further below its 200-day moving average. The benchmark S&P 500 slumped to its worst weekly performance since 2020. 

Here’s where US indexes stood after the 4:00 p.m. ET close on Friday:

  • S&P 5004,397.73, down 1.9% 
  • Dow Jones Industrial Average34,265.50, down 1.3% (449.89 points)
  • Nasdaq Composite13,768.92, down 2.72% 

Netflix plunged more than 20% after disappointing subscriber outlook. Year-to-date through Thursday, Netflix had lost nearly 16% alongside a broader selloff in tech stocks, which have largely benefitted from a low-interest-rate environment during the pandemic. Three Wall Street analysts explained here why they are less bullish on the stock.

Peloton, meanwhile, staged a rebound Friday to climb over 10% after a 24% slump in the previous session. The high-end exercise equipment maker acknowledged plans to adjust production to meet lower demand. 

US equities as a whole have been roiled in early 2022 by expectations that the Fed will repeatedly hike rates and start reducing its balance sheet, bringing an end to the central bank’s massive support of the US economy through the pandemic. 

“Wall Street has gone from debating how aggressive one should rotate out of tech into cyclical,” Edward Moya, senior equity analyst at Oanda, said in a Friday note.

Investors, Moya said, seem to have two main concerns: inflationary pressures that could prompt the Fed into becoming overly aggressive in tightening monetary policy, and profit growth expectations that may have been too optimistic amid ballooning labor costs.

Tech earnings coming up including Apple, Microsoft, Tesla, and Samsung.

“I’m focused on earnings,” Jason Brady, president and CEO of Thornburg Investment Management, said in a note. “Markets are moving in plenty of interesting ways to start the year …  I can pretty much bet that at the end of 2022 we’ll have a different market than one that is, every day, linearly correlated with rates.”

The 10-year Treasury yield edged lower to 1.749% from Thursday’s 1.833%. Bond yields move inversely to prices. 

In cryptocurrencies, prices have fallen sharply as the assets track the rout in equities.

Bitcoin plunged as much as 10% to a six-month low below $38,000 and ether dropped to under $3,000 as a broad sell-off intensified Friday.

“The decline is not a breakdown, but it brings bitcoin out of the consolidation phase that has characterized the chart for about three weeks in a bearish shift in short-term momentum,” Katie Stockton, founder of Fairlead Strategies, said in a note Friday, adding that $37,361 is the key support level she sees for bitcoin.

Oil slightly edged lower though prices are still near their highest levels since late 2014.

West Texas Intermediate crude oil fell 0.71% to $84.94 per barrel. Brent crude, oil’s international benchmark, dropped as much as 0.87% to $87.61 per barrel as strong demand for the commodity is outstripping global supply. 

JPMorgan said Brent could soar to $150 a barrel during the first quarter of 2022 if an ongoing conflict between Russia and Ukraine leads to a supply shock. 

Gold slipped 0.48% to $1,830.26 per ounce. 

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