US weekly: Nasdaq Composite reported its worst month since 2008

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US Weekly Update

The US market ended the volatile week and the month on the low. The US GDP numbers for Q1 were released, and most tech giants reported Q1 earnings. Nasdaq Composite reported its worst month since 2008.

US indexes staged a solid intraday rebound on Monday, driven by a rally in tech stocks as investors shed off fears arising from the strict lockdown in China. All the major indexes ended positively. The highlight of the day was that the Twitter board agreed to sell the microblogging site to Elon Musk.

The US market plummeted on Tuesday as investors weighed a flurry of corporate reports against a backdrop of inflationary pressures and concerns over an economic slowdown. The US Treasury yields retreated, with the 10-year benchmark falling to 2.7%.

After a sharp fall, the US market staged a comeback on Wednesday. It was a choppy trading session with major indexes swinging between gains and losses as they scrambled for direction. Investors digested mixed quarterly results from many companies amid growing concerns of economic slowdown and rising interest rates.

With strong first-quarter 2022 earning results, the US indexes closed sharply higher on Thursday. Despite a contraction of the US GDP in the last quarter, the results of the technology giant strengthened the market's confidence. The Department of Commerce reported that the US GDP declined by 1.4% year-over-year.

The US stock market declines accelerated in the last hours on Friday as indexes ended a volatile month. The tech-heavy Nasdaq Composite fell nearly 4.2%. The core personal consumption expenditures price index rose 5.2% from a year ago.

Key highlights of the week:

Quarterly results - Meta reported quarterly earnings of $2.72 per share beating analysts' estimates. Mastercard reported first-quarter 2022 earnings of $2.76 per share, higher than estimates. The tech giant, Amazon, reported a net loss of $3.8 billion in the first quarter. Apple reported revenue of $97.3 billion, higher than the Street estimate. Overall, results were mixed, with signs that growth is slowing but also evidence that long-term trends, like digital transformation, remain alive and well. 

Economic Data - US economic trade deficit in goods increased 1.7% in March to hit a record $125.3 billion. Pending home sales, a leading indicator of the US homebuilding activity and market, fell 1.2% in March, recording its fifth straight month of decline.

US GDP contracts - THe US economy contracted for the first time since the second quarter of 2020 at the start of this year. The Department of Commerce reported that the US GDP declined by 1.4% YoY in the first quarter of 2022 compared with the consensus estimate of an increase of 1%. This unexpected contraction was primarily due to a record-high trade deficit, lower government spending, and declining inventories.

Fed's meeting expected outcome - The Fed is likely to confirm its hawkish stance by hiking rates by 0.5% for the first time since 2000. It will formally launch the shrinking of its bond holdings, the so-called quantitative tightening. 

US Treasury bond - Inflation and the pace of interest-rate increases continued to weigh on prices of government bonds, sending yields to the highest levels in three and a half years. The yield of the 10-year US Treasury bond briefly climbed as high as 2.95% this week.