Nasdaq Pulls Back Sharply After Initial Move To The Upside

After an early move to the upside, stocks have come under pressure over the course of the trading session on Friday. The major averages have pulled back off their highs of the session, with the tech-heavy Nasdaq showing a particularly steep drop.

Currently, the Nasdaq is just off its lows of the session, down 164.27 points or 1.0 percent at 16,572.81. The S&P 500 is also down 19.86 points or 0.4 percent at 5,215.62, while the narrower Dow posting a modest gain, up 41.61 points or 0.1 percent at 38,153.09.

The Nasdaq continues to pull back off the record closing high set on Tuesday, as tech stocks such as AI darling Nvidia (NVDA) give back ground.

Computer hardware stocks have shown a substantial a substantial move to the downside, with the NYSE Arca Computer Hardware Index plunging by 4.8 percent after ending Thursday’s trading at a record closing high.

Dell Technologies (DELL) is leading the sector lower, plummeting by 22.0 percent after reporting better than expected first quarter results but forecasting its gross margin will pull back roughly 150 basis points in 2025.

Significant weakness is also visible among semiconductor stocks, as reflected by the 2.3 percent slump by the Philadelphia Semiconductor Index.

Chipmaker Marvell Technology (MRVL) is posting a steep loss after forecasting fiscal second quarter earnings slightly below analyst estimates.

Software stocks are also seeing considerable weakness, while retail stocks are turning in some of the market’s worst performances outside the tech sector.

On the other hand, telecom stocks have shown a strong move to the upside along with utilities, energy and pharmaceutical stocks.

The initial strength on Wall Street came following the release of a highly anticipated Commerce Department report showing consumer prices in the U.S. increased in line with economist estimates in the month of April, while core consumer prices edged up by slightly less than expected.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.3 percent for the third straight month in April, matching economist estimates.

Meanwhile, the report said the core PCE price index, which excludes food and energy prices, crept up by 0.2 percent in April after rising by 0.3 percent in March. Economists had expected another 0.3 percent increase.

The annual rates of growth by the PCE price index and the core PCE price index were both unchanged from the previous month at 2.7 percent and 2.8 percent, respectively. The readings matched expectations.

The readings on inflation, which are said to be preferred by the Federal Reserve, were included in the Commerce Department’s report on personal income and spending.

The Commerce Department said real personal spending, which excludes price changes, edged down by 0.1 percent in April after climbing by 0.4 percent in March.

“We are in a be-careful-what-you-wish-for moment because if slowing consumer spending leads to lower inflation and the Fed is able to cut slowly as a result then that will be good for markets,” said Chris Zaccarelli, Chief Investment Officer for Independent Advisor Alliance.

He added, “However, if consumer spending – and the economy – slows too quickly then corporate profits and stock prices will go down much more quickly than the Fed will be able to cut rates, so we would be careful at this point.”

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Friday. Japan’s Nikkei 225 Index jumped by 1.1 percent, while Hong Kong’s Hang Seng Index declined by 0.8 percent.

The major European markets have also turned mixed on the day. While the U.K.’s FTSE 100 Index is up by 0.3 percent, the French CAC 40 Index is down by 0.1 and the German DAX Index is down by 0.4 percent.

In the bond market, treasuries are extending the rebound seen in the previous session in response to the inflation data. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 6.1 basis points at 4.493 percent.

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