ASX set to fall, Wall Street tumbles on Trump worries

Stocks of the smallest companies, whose profits can be more closely tied to the strength of the US economy than big multinational rivals, fell more than the rest of the market. The Russell 2000 index of small stocks dropped a market-leading 2.9 per cent.

Within the big companies of the S&P 500 index, 3 out of every 4 stocks fell. Everything from Big Tech stocks that have been bid up amid the artificial-intelligence frenzy to airlines to metals companies dropped. Nvidia sank 4.1 per cent. United Airlines lost 6.4 per cent, and Newmont Mining fell 5.7 per cent.

Akamai Technologies had the sharpest drop in the S&P 500, even though the cybersecurity and cloud computing company reported stronger profit for the latest quarter than analysts expected. It lost a fifth of its value and fell 21.7 per cent as investors focused instead on its forecasts for revenue and other financial measures this upcoming year, which fell short of analysts’ expectations.

On the winning side of Wall Street was Celsius Holdings, which sells “better-for-you” energy drinks. It leaped 27.8 per cent after saying it agreed to buy Alani Nu, a beverage company that focuses on female customers. Analysts called the purchase price, $1.65 billion net of tax effects, reasonable and said the deal should quickly add to profits for Celsius, which also reported its latest quarterly results.

Other winners included stocks of companies that can provide steadier profits regardless of the US economy’s strength. Water utility American Water Works rose 3.1 per cent, for example.

All told, the S&P 500 fell 104.39 points to 6,013.13. The Dow Jones Industrial Average dropped 748.63 to 43,428.02, and the Nasdaq composite sank 438.36 points to 19,524.01.

Before Friday’s sharp drop, the S&P 500 had been heading for a week of almost zero movement. Helping to lift stocks had been a steady parade of better-than-expected profit reports. That helped offset worries about stubbornly high inflation, which could prevent the Federal Reserve from delivering more relief for the economy and financial markets through lower interest rates.

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The Fed has been holding its main interest rate steady after sharply cutting it through the end of last year. At their last policy meeting in January, Fed officials suggested they may stay on hold for a while given worries about how Trump’s proposed tariffs and mass deportations of migrants, along with other factors, could push upward on inflation.

While lower rates can boost the economy, they can also encourage spending that puts upward pressure on inflation.

Treasury yields fell in the bond market following Friday’s weaker-than-expected economic reports. The yield on the 10-year Treasury sank to 4.42 per cent from 4.51 per cent late Thursday.

In stock markets abroad, indexes were mixed in Europe after rising across much of Asia.

Hong Kong’s Hang Seng jumped 4 per cent for one of the world’s largest moves, boosted by a surge for e-commerce firm Alibaba, which reported stronger profit for the end of last year than expected. It also talked up its artificial-intelligence developments.

AP

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