Healthcare and tech stocks were the biggest losers, while financial stocks earned profits.
News Analysis
Volatility continued on Wall Street this week, with stocks losing money despite a drop in Treasury yields. Dow Jones Industrial and the high-tech Nasdaq led mixed revenues and economic reporting losses.
The S&P 500 index closed at 5,282 on April 17th, down 0.28% for the week. The Dow Jones industrial average fell 1.14% at 39,142. Nasdaq fell 0.62%, finishing the week at 16,286.
Among the profits were financial stocks, led higher by better revenue than expected from Bank of America and American Express.
Bank of America reported better revenue and revenue than expected due to strong transactions and revenue from retail consumer bank revenue.
American Express has beaten revenue and revenue market expectations driven by strong spending from wealthy consumers.
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Among the losers this week was healthcare stock, led by Dow Jones component UnitedHealthcare, a 23.6% drop that week. Health Care Company operates through four segments (unitedhealthcare, optum health, Optum Insight and Optum RX) and reported unpredictable results in the first quarter, breaking a long-standing tradition of exceeding expectations.
The loser for another week was in the high-tech sector led by Nvidia and AMD, following news of impending amortization due to restrictions on semiconductor exports to China.
A significant loss on the stock average came even in the weekly volatility at each trading session, caused by revenue from market leaders and economic headlines from Washington and the Federal Reserve.
Headlines about eliminating certain consumer electronic products from mutual tariffs added to positive sentiment in the market over the weekend. This was a bailout for the tech sector, sparking new investor interest, and benefiting Apple and Nvidia.
On the other hand, a decline in bonds alleviates fear of overvaluation and provides some cushioning for interest-sensitive stocks.
On the morning of April 15th, positive sentiment towards the stock was fueled by better returns than expected from Bank of America, igniting investors’ profits in the financial sector.
The tech sector also attracted attention, supported by hopes of tariff responsibilities and news of Nvidia’s plan to invest $500 billion in US AI-related infrastructure.
A further decline in bonds prior to the speech of Fed Chairman Jerome Powell, provided some support for risky assets and spread profits to other sectors.
On April 16, the stock market was driven by several headlines, expanding the negative trend. The first comes from Nvidia, a tech leader, which announced that it would amortize its approximately $5.5 billion H20 inventory for the April quarter due to export restrictions to sell these chips to China.
Amortization reduces revenue and free cash flow, which are key factors in stock valuation. As a result, Nvidia’s shares fell 9% in open, turning early profits for the week and cutting down the overall tech sector.
Meanwhile, the US Census Bureau reported in March that retail sales rose 4.60% compared to the previous year, exceeding market expectations. Strong sales data also fueled concerns about rising inflation.
Concerns about rising inflation increase bond yields as investors are reluctant to buy fixed income securities in an inflationary environment.
In his speech that day, Powell reiterated that the economy is very close to meeting the dual duties of maximum employment and price stability. At the same time, he warned that clearing tariffs could promote inflation and slow growth. This is a stagflation scenario that puts the Fed in a difficult position because both targets cannot be achieved at the same time.
It suggests that central banks are not in a hurry to cut interest rates, causing wider sales in the stock market.
On April 17, the market was mixed again, easing bond yields and getting caught up in disappointing revenues ahead of Friday’s holiday, when Friday’s holiday cut short trading week.
Etoro’s US investment analyst Bret Kenwell said equity investors are at a critical time.
“Currently, investors are facing a scenario where consumer and business trust is sinking and fear it will be heavier on spending and employment,” he told The Epoch Times.
“If that doesn’t turn out to be true, stocks will ultimately enjoy bailouts if the exclusion of trade wars increases. However, if this fear comes true, uncertainty increases with short-term risks and intermediate risks.”
