US stocks show strongest fall since March: investors stopped ignoring risks

The U.S. stock market experienced on Friday, May 15, the worst session since Ma, notes Bloomberg. The main indices turned downward after the records achieved the previous day. As a result, only S&P 500 remained in the plus at the end of the week. The market was pulled down by technological papers and the lack of significant breakthroughs following the meeting between U.S. President Donald Trump and Chinese President Xi Jinping, writes CNBC. As a result, concerns about inflationary pressures associated with higher oil prices came to the forefront and led to a jump in Treasury bond yields, MarketWatch notes.

- On Ma. 15, the broad market index S&P 500 declined by 1.2% and closed just above 7400 points, while the day before it first broke the 7500 mark. Over the week, the S&P 500 added a symbolic 0.13%. Nevertheless, this is the seventh consecutive week of growth - the longest since December 2023, Bloomberg writes.

- The blue-chip index Dow Jones Industrial Average lost 1.1% on Friday and 0.17% in five trading sessions.

- The Nasdaq Composite technology sector index retreated 1.5% from Thursday's record. At the end of the week, the index went down by 0.08%.

- The Russell 2000 index of small and mid-capitalization companies collapsed 2.3%. During the week Russell 2000 lost 2.2%.

- Brent crude futures jumped by 3.5% to almost $110 per barrel. WTI contracts rose by 4.4% and were traded at $105 per barrel.

- Gold fell 2.8% to $4,556 an ounce.

At the trading on Ma 15, investors were taking profits in the technology sector after its sharp growth since the beginning of Ma. In particular, shares of Intel collapsed by 6%, Advanced Micro Devices and Micron Technology lost 5.7% and 6.6%, respectively. Nvidia securities fell in price by 4.4%. Quotes of its rival Cerebras, which soared on Thursday after the IPO by almost 70%, on Friday collapsed by 10%.

Of the "Magnificent Seven" stocks, only Microsoft was an exception: it added 4% to its value after billionaire Bill Ackman disclosed his stake in it. He said his Pershing Square fund bought a stake in the company, finding its valuation "very attractive".

Treasury bond yields jumped on Friday, adding pressure on stocks as the yield on 30-year securities topped 5.1 percent and hit its highest since 2025, CNBC wrote. A series of reports this week showed inflation accelerating again as oil prices remain high due to conflict in the Middle East. At first, investors managed to ignore the troubling data as they expected some sort of agreement between the U.S. and China on the situation in the Strait of Hormuz to be announced during a meeting between the leaders of the two countries in Beijing. But when no breakthroughs happened and global bond yields soared, it became impossible to ignore the risks, MarketWatch explains.

For the first time in the Fed's current policy cycle, markets have begun laying odds that the regulator's next move will be an interest rate hike, CNBC reports . Traders now rate the probability of a tightening in December at nearly 51%, a tightening in January at about 60%, and a rate hike in March at more than 71%, data from CME Group's FedWatch tool shows.

If the Fed raises rates, it could hit stocks of high-growth companies, the channel warns.

- The stock market's V-shaped recovery from the March selloff has made it overheated and vulnerable to a pullback, Truist Advisory Services Chief Investment Officer Keith Lerner said in an interview with MarketWatch. The tech rally "probably needs a breather," he said. "The market is increasingly worried about sustained inflation," the analyst noted.

- "We were a little surprised that the market [at first] kind of brushed off the inflation data that came out this week," Adam Phillips, managing director of investments at EP Wealth, told MarketWatch. - But these things don't matter until they suddenly start to matter."

- "The group [of tech stocks] has shown extremely choppy movement in recent weeks and remains vulnerable to profit taking regardless of headlines," CNBC quoted Vital Knowledge founder Adam Crisafulli as noting.

- Investor sentiment "generally remains very optimistic," notes Argent Capital Management portfolio manager Jed Ellerbrook, but notes that the broad market is lagging behind the largest technology companies. This divergence is increasingly worrying some investors because it indicates the rally is fragile, Ellerbrook emphasizes.

This article was AI-translated and verified by a human editor