Wall Street’s main indices fell sharply on Thursday, May 5, the biggest drop since the early days of the pandemic as investors feared a steep rate hike at the Fed’s next meeting in June.
The S&P 500 fell 3.56% to 4,146.87. The Dow Jones dropped 3.12% to 32,997.97. The NASDAQ Composite declined 4.99% to 12,317.69, and the small-cap Russell 2000 fell 4.04% to 1,871.15.
On Wednesday, the central bank increased the interest rates by 50 basis points after its initial revision in March - raising them by 25 basis points. However, the market anticipated a far more aggressive rate hike, up to 75-basis points, after Fed's next meeting in June. Investors betted on higher rates, although Fed chair Jerome Powell has ruled out such a hike.
The Labor Department on Thursday said that the initial unemployment benefits claims surged 19,000 to a seasonally adjusted 200,000 in the previous week, the highest increase since Mid-February. The department will now release its monthly employment report on Friday.
In a separate report, the department also said that the US productivity in the first quarter fell the most since 1947, highlighting economic decline, high labor costs, and a tight labor market. It said productivity slumped at an annual rate of 7.5% in the quarter from 6.3% in Q4, FY21.
The information technology, consumer discretionary, and communication services sectors were the bottom movers on the S&P 500 index on Thursday. All its 11 sectors closed in the red.
Shares of Canadian e-commerce firm Shopify Inc. (SHOP) dropped 14.63% in intraday trading after reporting its first-quarter earnings, missing analysts' expectations.
Online retailer of household goods Wayfair Inc. (W) stock tumbled 26.26% after reporting a bigger-than-expected quarterly loss in the last quarter.
Shares of Etsy, Inc. (ETSY) plummeted 17.80% after it provided downbeat guidance for the current quarter. eBay Inc. (EBAY) slipped 9.90% after trimming its guidance as the Russia-Ukraine war weighed on its business.
In technology stocks, Apple Inc. (AAPL) decreased by 5.57%, Microsoft Corporation (MSFT) fell 4.36%, and NVIDIA Corporation (NVDA) lost 7.33%. Broadcom Inc. (AVGO) and ASML Holding N.V. (ASML) ticked down 3.92% and 4.80%, respectively.
In consumer discretionary stocks, Amazon.com, Inc. (AMZN) declined 7.56%, Tesla, Inc. (TSLA) slipped 8.33%, and The Home Depot, Inc. (HD) dropped 5.14%. Alibaba Group Holding Limited (BABA) and Nike, Inc. (NKE) plunged 6.68% and 5.89%.
In the communication services sector, Alphabet Inc. (GOOGL) slumped 4.71%, Meta Platforms, Inc. (FB) decreased by 6.77%, and The Walt Disney Company (DIS) slipped 3.08%. Netflix, Inc. (NFLX) Comcast Corporation (CMCSA) plummeted 7.69% and 2.98%.
In the crypto space, Bitcoin (BTC) and Ethereum (ETH) fell 8.78% and 7.35%, respectively. The global crypto market rose 7.45% to US$1.67 trillion at 4:25 pm ET on May 5.
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Futures & Commodities
Gold futures were up 0.52% to US$1,878.47 per ounce. Silver increased by 0.71% to US$22.560 per ounce, while copper fell 1.08% to US$4.2910.
Brent oil futures increased by 0.86% to US$111.09 per barrel and WTI crude was up 0.61% to US$108.47.
The 30-year Treasury bond yields were up 3.87% to 3.119, while the 10-year bond yields rose 4.03% to 3.033.
US Dollar Futures Index increased by 0.96% to US$103.578.