Stocks Slump to End Bruising Month of April
Aside from brief spurts of short‐covering activity, earnings relief bids, and mechanically-oriented buying, the market remained pressured by concerns about the Fed aggressively tightening policy in a low growth, high inflation environment.
The Advance GDP report had the hallmarks stagflation, although unemployment levels remain historical low: real GDP decreased at an annual rate of 1.4% in the first quarter (Briefing.com consensus +1.1%) while the GDP Chain Deflator increased by a larger‐than‐expected 8.0% (Briefing.com consensus +7.3%).
Pricing pressures were further illustrated by the following events:
Risk sentiment was further pressured by the mixed state of earnings when considering the results, guidance, and reactions. Meta Platforms (FB) stood out among the mega‐cap earnings, rising 9% this week on better‐than‐feared results, but other stocks like Teladoc (TDOC) continued to get crushed on disappointing news.
Treasury yields ended the week slightly lower amid an uptick in demand. The 2‐yr yield decreased three basis points to 2.69%, and the 10‐yr yield decreased two basis points to 2.89%. The U.S. Dollar Index rallied 1.9% to 103.20.
Separately, Twitter (TWTR) agreed to be acquired by an entity wholly owned by Elon Musk for approximately $44 billion, or $54.20 per share, in cash. Mr. Musk sold over $8 billion of Tesla (TSLA) shares this week to presumably help finance the deal.
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2022-137552 (Exp. 08/22)