S&P 500 tumbles nearly 3.0% back under 4200, probes monthly lows as Amazon stock tanks

• US equities slumped on Friday, led by a more than 14% decline in Amazon’s share price post earnings.
• The S&P 500 dropped nearly 3.0% to test monthly lows in the 4,160s, where it trades over 8% lower on-the-month.

A more than 14% drop in US tech giant Amazon’s share price to its lowest level in nearly two years under $2500 per share weighed heavily on the major US indices on Friday. Amazon posted its Q1 earnings results after Thursday’s market close, which revealed that higher costs were squeezing margins more than expected. Fellow tech giant Apple also reported earnings after Thursday’s close and failed to lighten the mood. The iPhone maker’s share price was last trading lower by about 1% despite posting record sales and profits in Q1, with traders citing a weak outlook.

Downbeat earnings meant the US equity markets were a sea of red on Friday, with no major sector able to escape the sell-off. The S&P 500 was last trading lower by about 2.5% below the 4,200 level and eyeing a test of multi-week lows printed earlier in the week around 4,160. The tech-dense Nasdaq 100 index was down a little over 3.2% and eyeing a test of weekly lows at 13,000, while the Dow was last down a little over 1.5% and also eyeing a test of weekly lows just under 33,100.

Traders said Friday’s sell-off was partially worsened after US yields rallied in wake of data revealing a larger than expected jump in the Employment Cost Index in Q1 this year, which seemed to encourage markets to up their bets on Fed tightening. Indeed, fears about Fed tightening, with the bank expected to lift interest rates by 50 bps next week followed by a series of further rate hikes of similar magnitude, have been a key factor weighing on US equities this month.

The S&P 500 is currently on course to post a near 8.0% loss on the month, its worst performance since Q1 2020, with the index now back in correction territory versus record highs above 4,800 printed at the start of the year. The losses are more severe for the Nasdaq 100, which looks set to end the month around 12.5% lower, taking the index more than 20% below its peak last November, meaning the index is in an official “bear market”. The Dow, meanwhile, looks set to end the month a more modest 4.0% lower and is still less than 10% below its record highs from back in January.