Wall St Tumbles As Weak Earnings, Rate Hike Worries Weigh

U.S. stocks tumbled on Friday after some weak earnings reports, with growth shares coming under pressure in a torrid week that saw bond yields surge on expectations of interest rate hikes.

All the 11 major S&P 500 sectors fell, with healthcare stocks leading the declines after a downbeat profit view from HCA Healthcare sent its shares tumbling 19.0%.

Other hospital operators Tenet Healthcare, Community Health Systems and Universal Health Services also fell between 12.9% and 17.0%.

Concerns about risks from interest rate hikes continued to weigh on megacap growth stocks, especially after Federal Reserve Chair Jerome Powell's hawkish pivot on Thursday.

Powell backed moving more quickly to combat inflation and said a 50 basis point increase would be "on the table" when the Fed meets in May.

The comments triggered a selloff in Meta Platforms Inc and Amazon.com Inc, which were already reeling from streaming giant Netflix Inc's dismal earnings earlier this week.

"The rate environment is not going away. COVID is not going to disappear overnight. Earnings are going to be affected by these issues," said Andre Bakhos, managing director at New Vines Capital LLC in New Jersey.

"So we have a cauldron brewing with ingredients that make for a dangerous combination."

The CBOE Volatility index, also known as Wall Street's fear gauge, hit a five-week high.

The prospect of a more hawkish Fed has led to a rocky start to the year for equities, in particular tech and growth shares whose valuations are more vulnerable to rising bond yields.

Alphabet Inc, Apple Inc and Amazon.com Inc fell between 0.9% and 3.5%, adding to sharp losses this week.

At 12:56 p.m. ET, the Dow Jones Industrial Average was down 586.53 points, or 1.69%, at 34,206.23, the S&P 500 was down 76.07 points, or 1.73%, at 4,317.59, and the Nasdaq Composite was down 214.40 points, or 1.63%, at 12,960.25.

All the three main indexes were on course to end the week lower.

Adding to inflation worries, U.S. business activity slowed in April as soaring costs for raw materials, fuel and labor pushed input prices to a record high, a survey by S&P Global showed.

Among other companies that reported results, Gap Inc tumbled 19.7% after the apparel company cut its forecast for quarterly sales, blaming execution challenges at its Old Navy brand and "macro-economic dynamics".

Surgical robot maker Intuitive Surgical Inc declined 12.9% after it warned of weaker demand from hospitals due to tighter finances.

Verizon Communications Inc fell 6.1% after disappointing full-year earnings forecast.

However, Schlumberger NV gained 4.3% after reporting a higher first-quarter profit, as rising oil prices due to Russia's invasion of Ukraine boosted the demand for oilfield services and equipments.

Of the 99 companies in the S&P 500 that have reported earnings for the first quarter, 77.8% of them have beat market expectations. Typically, 66% of companies beat estimates, according to Refinitiv data.

Declining issues outnumbered advancers for a 5.24-to-1 ratio on the NYSE and a 3.12-to-1 ratio on the Nasdaq.

The S&P index recorded 2 new 52-week highs and 20 new lows, while the Nasdaq recorded 15 new highs and 397 new lows.