Interest Rate Worries Contribute To Extended Sell-Off On Wall Street

(RTTNews) - Stocks moved steadily lower throughout the trading session on Friday, extending the sharp pullback seen on Thursday. With the steep drop on the day, the major averages slumped to their worst closing levels in over a month.

The major averages saw further downside going into the close, ending the session near their worst levels of the day. The Dow plummeted 981.36 points or 2.8 percent to 33,811.40, the Nasdaq plunged 335.36 points or 2.6 percent to 12,839.29 and the S&P 500 dove 121.88 points or 2.8 percent to 4,271.78.

The extended sell-off contributed to substantial losses for the week. The Dow slumped by 1.9 percent, while the S&P 500 and the Nasdaq tumbled by 2.8 percent and 3.8 percent, respectively.

The continued weakness on Wall Street partly reflected ongoing concerns about the Federal Reserve aggressively tightening monetary policy.

In comments on Thursday, Fed Chair Jerome Powell said he saw merit in "front-end loading" policy moves and indicated a 50 basis point rate hike would be on the table at the central bank's next meeting in early May.

CME Group's FedWatch Tool currently indicates a 50 basis point rate hike at the May meeting is a near certainty.

Traders may also have been moving out of stocks ahead of the release of a deluge of earnings news from big-name companies next week.

Coca-Cola (KO), General Electric (GE), Alphabet (GOOGL), Microsoft (MSFT), Boeing (BA), McDonald's (MCD), Twitter (TWTR), Amazon (AMZN), Intel (INTC) and Exxon Mobil (XOM) are just a few of the companies due to report their quarterly results.

Among individual stocks, shares of Gap (GPS) fell sharply after the apparel retailer lowered its first quarter sales guidance and announced the departure of Old Navy President and CEO Nancy Green.

Telecom giant Verizon (VZ) also came under pressure after reporting first quarter earnings in line with estimates but providing disappointing guidance.

On the other hand, shares of Kimberly-Clark (KMB) spiked after the consumer products company reported better than expected first quarter results and raised its full-year sales forecast.

Sector News

Steel stocks turned in some of the market's worst performances on the day, dragging the NYSE Arca Steel Index down by 3.9 percent to its lowest closing level in a month.

Substantial weakness was also visible among healthcare stocks, as reflected by the 3.6 percent plunge by the Dow Jones U.S. Health Care Index. The index also tumbled to a one-month closing low.

Hospital operator HCA Healthcare (HCA) helped lead the sector lower, plummeting by 21.8 percent after reporting first quarter earnings that missed analyst estimates.

Airline stocks also showed a significant move to the downside on the day, resulting in a 3.5 percent nosedive by the NYSE Arca Airline Index. The index gave back ground after ending the previous session at its best closing level in two months.

Brokerage, chemical and computer hardware stocks also moved considerably lower, reflecting broad based selling pressure on Wall Street.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Friday. Japan's Nikkei 225 Index tumbled by 1.6 percent, while Hong Kong's Hang Seng Index dipped by 0.2 percent.

The major European markets also showed significant moves to the downside on the day. While the U.K.'s FTSE 100 Index slumped by 1.4 percent, the French CAC 40 Index and the German DAX Index plunged by 2 percent and 2.5 percent, respectively.

In the bond market, treasuries showed a lack of direction over the course of the session before closing modestly higher. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, edged down by 1.1 basis points to 2.906 percent.

Looking Ahead

As mentioned above, traders will be inundated with a slew of earnings news next week, with reaction to the results likely to help drive trading.

Reports on durable goods orders, new home sales, first quarter GDP and personal income and spending may also attract attention as traders prepare for the next Fed meeting in early May.