Weekly Market Recap – May 2nd

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Nasdaq closes worst month since 2008

Tech investors haven’t taken a beating like this in nearly 14 years. The Nasdaq 100 Index plunged more than 13% in April, its worst monthly performance since October 2008. Fears that a string of aggressive Federal Reserve rate hikes this year could lead to a major slowdown in the U.S. economy only added to the selling pressure. The tech-heavy gauge has now fallen by at least 3% for four straight weeks, the longest such stretch since March 2009.

Source: Bloomberg

Not even big tech is safe

The five largest U.S. stocks by market capitalization — Apple Inc., Microsoft Corp., Alphabet Inc., Amazon.com Inc. and Tesla Inc. — have lost more than $1 trillion in combined value this month. Shares of Amazon plunged by the most since 2011 on Friday after the tech giant provided bleak forward looking comments spooking investors. Earlier in the week, Alphabet reported a rare earnings miss amid slower ad sales in Europe and a lackluster performance by YouTube.

Source: Bloomberg

Cost pressures remain high as Diesel reaches records

Diesel futures trading in New York just keep climbing higher. NYMEX ultra-low sulfur diesel extended a record rally, jumping as much as 2.1% on Thursday to the highest level in data going back to 1986 ahead of the contract expiration on Friday. Diesel has become the world’s most in-demand fuel since Russia’s invasion of Ukraine as buyers compete for supplies as fast as refiners on the U.S. Gulf Coast can make them. Overall U.S. distillates stockpiles — which include both diesel and heating oil — dwindled to 107 million barrels last week, their lowest since 2008.

Source: Bloomberg

Stock pickers face a difficult environment

Picking winners during any prolonged selloff is a tough task, but for investors trading technology stocks, that difficulty has hit a level not seen in nearly two years. The Nasdaq 100 Index’s three-month realized correlation — a gauge of how closely the top weighted stocks in the benchmark move relative to each other — has climbed to its highest level since June 2020. That means stock pickers are increasingly at the mercy of the gauge’s biggest names, including Apple Inc. and Amazon.com Inc.

Source: Bloomberg

Brazil stocks cheapest since 2008

Brazil’s commodity-heavy stock market is trading at less than seven times forward earnings estimates, the least in more than 13 years, amid growing doubts over the outlook for raw materials prices. While the rally in commodities has driven up earnings per share in Brazil, “the market is skeptical that commodity prices will remain so high for years to come,” said Goldman Sachs Group Inc. strategist Caesar Maasry. It’s a stark contrast to Mexico, where the S&P/BMV IPC Index is trading at 12.9 times estimates, little changed this year.

Source: Bloomberg

Cross-asset volatility remains elevated

The bond market volatility that has been steadily rising over the past month is now spreading to equities. European and U.S. stock volatility indexes have spiked to the highest level in a month, spurred by fears of an economic slowdown, as well as escalation in the standoff between Russia and Europe over energy supplies and the war in Ukraine. The TINA (there is no alternative) mindset for equities “is in jeopardy as rates have repriced and inflation narrative is starting to reverse,” according to Barclays Plc strategists.

Source: Bloomberg