U.S stocks closed sharply lower on Friday. The Dow Jones Industrial Average suffered its biggest one-day drop so far for this year. U.S Treasury yields extended gains. Investors are still watching for hawkish comments from Federal Reserve Chairman Jerome Powell. Newly released U.S stock earnings reports were mostly disappointing. The Dow Jones Industrial Average fell 1.85% for the week, its fourth straight weekly loss. The S&P 500 fell 2.75% this week, and the Nasdaq fell 3.83% this week, both for the third consecutive week of declines. U.S Treasury yields continued to climb Friday. The yield on the 10-year treasury bond once rose to 2.944%, the highest since December 4, 2018.
Investors continued to assess comments from Federal Reserve Chairman Jerome Powell on Thursday about accelerating interest rate hikes to lower inflation, and Powell also hinted at a possible 50 basis point rate hike in May. This reinforced market expectations for a rapid tightening of monetary policy. In addition, health care and retail companies generally lowered their earnings forecasts for this year, igniting pessimism in the market.
Economist Jeanette Garrett pointed out that Powell's hawkish remarks are very influential, but a large number of companies are pessimistic about future sales growth when they report earnings, which makes investors realize that fighting inflation will bring some pain.
Tesla (NASDAQ: TSLA) CEO Elon Musk has created three holding companies as part of its attempt to buy Twitter Inc (NYSE: TWTR), which could provide it with a path to bring all of its commercial ventures under a single parent company. The three holding companies, each with X Holdings in its name, were formed in the Delaware state this week. Back in 2012, Musk considered creating a parent company, and in 2020, he said naming it “X” would be a good idea.
Snap (NYSE: SNAP) first-quarter revenue was $1.063 billion, and its net loss widened 25% year-over-year. Snap, the parent company of Snapchat have released the companys first-quarter earnings for fiscal 2022. According to the report, Snap revenue in the first quarter was $1.063 billion, an increase of 38% compared with the $770 million in the same period last year. The net loss was $360 million, an increase of 25% compared with the net loss of $287 million in the same period last year.
Communications giant Verizon (NYSE: VZ) announced first-quarter earnings. Data show that Verizon's first-quarter revenue was $33.6 billion, and adjusted earnings per share were $1.35, basically in line with analysts' estimates. However, this is the first time the company's earnings have missed market expectations since 2019. In addition, dragged down by factors such as high inflation and intensified competition in the industry, Verizon lowered its full-year sales forecast. Affected by this, Verizon fell nearly 6% in intraday trading on Friday, the largest intraday drop since March 2020.
Major crypto tokens traded lower on Friday following hawkish comments from Federal Reserve Chairman Jerome Powell and the U.S. central banks intention to aggressively tackle inflation. All major crypto tokens traded lower on Friday except for the dollar-pegged dollar coin. Solana fell 4%, followed by Bitcoin, Ethereum, Luna and Dogecoin down 3%. The global cryptocurrency market capitalization has almost dropped to the $1.88 trillion mark.
Hawkish comments from Federal Reserve Chairman Jerome Powell are weighing on the crypto market. The U.S. central bank is expected to respond aggressively to rising inflation numbers. Rising borrowing costs and the risk of a potential recession have made safe-haven assets an attractive option, so investors shunned risky assets. Bitcoin pulled back slightly to near $40,000 on Friday as exchanges saw heavy selling amid weakness in the cryptocurrency market. Bitcoin 2-hour trend is below an ascending triangle pattern, with immediate support for Bitcoin expected at $37,600.
“We've seen a sharp outflow of Bitcoin and ETH from exchanges, indicating that there are very few tokens available for buyers on exchanges. Bitcoin's 30-day supply on exchanges has been Negative, outflows are greater than inflows, and ETH has been negative since March 15. This underscores the range-bound action were seeing as illiquidity turns momentum into price action as prices rise or fall.” said Darshan Bathija, CEO and co-founder of Vault.
The international gold price was basically stable on Friday but the weekly line is expected to close lower again after a lapse of two weeks, as the U.S dollar index continues to remain strong, and Fed officials have adopted a hawkish stance on tightening monetary policy, consolidating that it will aggressively raise interest rates to deal with soaring inflation. This has put heavy pressure on gold prices. However, U.S inflation is high, the global economic outlook has been lowered, and factors such as the Russian-Ukrainian conflict will limit the downside of gold prices.
Gold prices have fallen more than 1% this week. Gold prices rose near the key $2,000 an ounce mark on Monday as safe-haven demand and inflation concerns intensified, but have since retreated sharply.
Federal Reserve Chairman Jerome Powell said on Thursday (April 21) that raising interest rates by 0.5 percentage points was a strategy “on the table” at the Fed's May policy meeting. This shown that the Fed will take a series of aggressive actions.
Next week, the market will be tested by a series of heavy economic data from the United States, including the initial GDP data of the first quarter of the United States and geopolitical events such as the conflict between Russia and Ukraine. The changes in the market's latest interest rate hike expectations by the Federal Reserve investors also keep an eye on it.
On Friday (April 22), U.S. oil prices are set to fall back this week. International institutions have lowered their forecasts for global crude oil demand this year, the Fed is expected to raise interest rates significantly, and the global fight against the epidemic is still facing severe tests, suppressing the outlook for crude oil demand. However, Europe embargoed Russian crude oil, and OPEC showed no further signs of increasing production, which has always supported oil prices. Many institutions are still optimistic about the outlook for oil prices. WTI crude futures fell 1.98% to $101.74 a barrel, while Brent crude futures fell 1.84% to $106.34 a barrel.
Analyst Tina Teng said an oil embargo caused by ongoing sanctions against Russia and supply shortages caused by the war in Ukraine
The U.S Energy Department said on Thursday that it had authorized the first round of contracts to sell 30 million barrels of crude in the largest release of the Strategic Petroleum Reserve on record in response to rising prices caused by Russia's invasion of Ukraine.
According to the IMFs forecast of global economic growth in 2022 from 4.4% to 3.6%, they expect global crude oil demand in 2022. Growth will slow to 2.52% from 3.08%. OPEC told the International Monetary Fund's steering committee on Thursday that the surge in oil prices was largely due to the crisis in Ukraine, the latest signal that the producer group will not take further action to boost supply.
This week after several Feds hinted at the prospect of accelerating the pace of interest rate hikes, the U.S dollar index rose three times in a row, hitting a new high of 101.07 since March 26, 2020.
Powell said raising rates by 50 basis points would be “one of the options” at the Fed's May 3-4 meeting, when the Fed will approve the next rate hike, with a series of rate hikes expected this year.
After Powell's speech, analysts at Action Economics said that concerns about the Fed's increasingly aggressive policy stance have increased, putting pressure on government bonds, especially short-term government bonds, and rising interest rates dragged U.S stocks lower. However, the dollar is the beneficiary.
The trend of European currencies has diverged. The exchange rate of the euro against the dollar has temporarily stabilized and has not further fallen below the new low of 1.0757 since late April 2020, which was set last week. Supported by the hawkish remarks of the European Central Bank officials, the prospect of interest rate hikes by the European Bank is bullish. Bundesbank President Joachim Nagel said the European Central Bank is likely to raise interest rates early in the third quarter. Now expects the European Bank to raise interest rates by 20 basis points in July.
Poor UK consumption data weighed on the pound, which hit a new low of 1.2861 against the dollar since early November 2020.
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