US stocks ended Thursday sharply lower with the technology-focused Nasdaq registering its biggest one-day decline since June 2020.
Investor sentiment plunged over concerns that the Federal Reserve’s interest rate rise the previous day would not be enough to tame surging inflation.
The bearish outlook spilled over into Asia on Friday, with shares in Hong Kong-listed Chinese technology groups dipping. Hong Kong’s Hang Seng Tech Index opened 4% lower, compared with the broader Hang Seng index dropping just 2.5%.
E-commerce giant Alibaba fell almost 5% and food delivery group Meituan dropped nearly 6% in morning trading.
On Thursday, all Wall Street benchmarks erased gains: The Dow’s decline was its worst daily performance since October 2020.
Technology Stocks Get Hammered
Technology stocks slumped with Google parent Alphabet, Apple, Microsoft, Facebook owner Meta Platforms, Tesla and Amazon.com all falling between 4.3% and 8.3%.
“Investors aren’t looking at fundamentals such as earnings right now, and this is more of a sentiment issue,” Megan Horneman, chief investment officer at Verdence Capital Advisors, said.
The US central bank on Wednesday raised interest rates by half a percentage point and Fed chair Jerome Powell explicitly ruled out a rise of 75 basis points. Traders, however, raised their bets on Thursday on a 75bp hike at the Fed’s meeting in June.
Worries about Fed policy moves, mixed earnings from some big growth companies, the conflict in Ukraine and pandemic-related lockdowns in China have hammered Wall Street recently, overshadowing a better-than-expected quarterly reporting season.
“We would also note that this selloff may be motivated by worries that payrolls and hourly earnings would point to a firm labour market,” DBS analysts said.
The Dow Jones Industrial Average fell 1,063.09 points, or 3.12%, to 32,997.97, the S&P 500 lost 153.3 points, or 3.56%, to 4,146.87 and the Nasdaq Composite dropped 647.17 points, or 4.99%, to 12,317.69.
Only 19 of the S&P 500’s constituents closed in positive territory, one of which was Twitter, which ended 2.6% higher.
- Reuters, with additional editing by George Russell
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