Market update: Nasdaq declines 2% as stocks hit 4-week low

Nasdaq fell 2.2% on Thursday as US stocks closed lower ahead of the holiday weekend.

The declines across Wall Street came on the day several major US banks released their first-quarter earnings results. All the three major US indexes also slipped Thursday inflationary pressures and investor anxiety over an aggressive Federal Reserve continued to weigh on risk-on sentiment.

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The S&P 500 lost 1.2% on the last trading day of this holiday-shortened week, while the Dow Jones Industrial Average pared earlier gains to end the day 0.3% lower.

A choppy week had seen US stocks end Wednesday’s session in the green, but the past four days have largely been a drawdown. Today’s performance sees Wall Street post a second consecutive week of losses, with stocks hitting a four-week low in the process.

European stocks closed higher after ECB announcement

European stocks closed slightly higher as investors reacted to news that the European Central Bank (ECB) was set to end its bond-buying program in Q3 2022.

The ECB says it will look to finalise its asset purchase program (APP) in the next five months. It is expected the central bank will then begin to raise interest rates as the Fed and Bank of England have done.

The news announced on Thursday, saw the pan-European Stoxx 600 close 0.67% higher. Germany’s DAX ended the session 0.62% up, while France’s CAC edged 0.72%.

In the UK, the FTSE 100 gained 0.47%. Russia’s MOEX fell 4.89% amid the Russia-Ukraine war.

Markets update

As stocks roiled amid negative sentiment, Treasury yields moved higher to hit levels last seen in 2018. The US 10-year benchmark rose more than 14 bps to break above 2.8%, while a similar bounce occurred across the yields market.

Elsewhere, the Dollar Index firmed against a basket of peers, clocking +0.455 to lodge above 100.3. Crude oil was up 2.1% to $106.54 a barrel, while gold eased 0.4% to hit $1,975 per ounce. In crypto, Bitcoin broke below $40,000 again and was 2.9% down in the past 24 hours.

Major banks release earnings results

Thursday saw US banking heavyweights release their first-quarter earnings results. Those to report included Morgan Stanley (NYSE: MS), Wells Fargo (NYSE: WFC), Goldman Sachs (NYSE: GS), and Citigroup (NYSE: C).

The banks have largely been hit as profits dwindled across the sector amid inflationary pressures, supply woes and recently the impact of Russia’s invasion of Ukraine.