US Weekly: Nasdaq Records First 5-Week Losing Streak Since 2012

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The market started the new week and the month on a positive note. However, all major indices ended the volatile week lower as investors weighed rising global inflation and Federal Reserve's 0.5% rate hike. The Dow finished down for its sixth consecutive negative week. The S&P 500 and Nasdaq finished their fifth straight losing week.

On Monday, the market opened flat but during the last hour, all major indexes turned positive. US crude oil prices reversed earlier declines to hover above $105 per barrel. The benchmark 10-year Treasury yield rose to 3%, its highest level since December 2018.

The market continued the momentum from the previous session and rose slightly higher on Tuesday as investors looked forward to a pivotal Fed decision. Tuesday’s gains were broad in the S&P 500 but led by the energy sector. Defensive sectors such as health care and utilities also outperformed.

After the Fed raised rates by a widely anticipated 50 bps and Chairman ruled out getting even more aggressive in the central bank’s inflation-fighting campaign, the stocks jumped sharply on Wednesday. Large tech stocks moved higher following the Fed announcements. 

The market fell sharply on Thursday erasing all the gains from the previous session. The Dow Jones Industrial Average fell by 3.12%. The tech-heavy Nasdaq Composite fell 4.99% and closed at its lowest closing level since November 2020. Both of those losses were the worst single-day drops since 2020.

All the three major indexes started the day on a positive note on Friday, but the stocks lost ground and closed lower. Tech stocks were again an area of weakness for the market on Friday.

Key highlights of the week:

Quarterly results: Meta reported its quarterly result, and the topline failed to beat the estimate. Facebook’s net income fell by 21% to $7.4 billion. Check the detailed report here. Airbnb reported a loss of 3 cents per share for the first quarter of 2022 against earnings of 8 cents in the previous quarter. Uber reported a net loss of $5.9 billion for the first quarter, it was primarily due to its equity investments in Grab, Aurora, and Didi.

U.S. Treasury yield: Treasury note yield breached 3.00% for the first time since late 2018, climbing as high as 3.13% on Friday. The yield curve continued its recent steepening trend as long-term inflation expectations and long-maturity Treasury yield increased, and more investors eliminated bets that the yield curve would flatten.

Interest Rate Hike by Fed: The US Federal Reserve increased the interest rate by 50 bps or half percent. The increase in benchmark rate by the US Fed is seen by many as the sharpest hike in the past two decades. With the hike, the Fed’s benchmark rate has been raised to a range of 0.75% to 1%. Check the detailed report here.

Recession worries: The US economy is slowing due to many factors like the fading boost from last year's stimulus checks, rising consumer prices that are dampening consumption and real wages, and ongoing supply bottlenecks. The recent pullback, along with last week's reaction to the Fed meeting, appears to be pricing in a consensus view that a recession is imminent.