US stocks plummeted on Friday as the market finished one of its worst months in recent history.
This marked the end of an unusually brutal month for US stocks. In April alone, the Nasdaq tumbled 13.3 per cent – its worst month since October 2008, when the world was still gripped by the Great Recession. And the S&P 500 slid by 8.8 per cent, its steepest one-month drop since the start of the pandemic.
A number of factors may have contributed to the plunge. On Thursday, Amazon reported a shocking $3.8bn loss in this year’s first quarter – its first loss since 2015. On Friday, Amazon’s stock plummeted by 14 per cent.
In addition, investors concerned about inflation may have been spooked by the latest numbers.
On Friday, the US Department of Commerce announced that the personal consumption expenditures price index – a key figure for measuring inflation – has risen by 6.6 per cent since last March (or 5.2 per cent excluding food and energy prices), the fastest increase since 1982.
Others worry about the measures the Federal Reserve could take to fight that inflation, in the form of higher interest rates. The Fed is widely expected to dial rates up next week.
“Rising cost pressures and uncertain outlooks from the largest technology names have investors agitated,” Charles Ripley, a strategist for Allianz Investment Management, told the Associated Press. “And investors are not likely to be comfortable any time soon with the Fed widely expected to deliver a 50-basis point hike, along with a hawkish message next week.”
Meanwhile, a host of global problems – the war in Ukraine, the ongoing Covid-19 pandemic, disrupted supply chains, and rising oil prices, among others – continue to rattle investors.
Amazon’s CEO, Andy Jassy, mentioned some of these issues as he revealed his company’s losses on Thursday.
“The pandemic and subsequent war in Ukraine have brought unusual growth and challenges,” Mr Jassy said in a statement. He added that adjusting to the new business climate “may take some time, particularly as we work through ongoing inflationary and supply chain pressures.”