Source: wind financial terminal
After rebounding overnight, U.S. stocks fell after the opening bell, with tech stocks slumping as investors worried about the outlook for economic growth intensified, Hong Kong’s Wind news agency reported.
The S&P 500 fell 1.2% on Tuesday, the Dow Jones Industrial Average fell 0.6% and the tech-heavy Nasdaq Composite fell 2%.
As investors try to understand the trajectory of the U.S. economic outlook, Fed policy has added a lot of uncertainty. Many are increasingly worried that the Fed’s plan to tighten monetary policy to curb inflation could tip the U.S. economy into recession.
Worries about a slowdown in economic growth due to rising inflation have been among the reasons U.S. stocks have tumbled in recent months. Investors are now watching closely for the S&P 500 to enter bear market territory, defined as a decline of at least 20% from its recent high. The index was close to bear market territory on Friday, but rebounded late in the session.
Snap shares tumbled more than 31% after the company said it would miss earnings and revenue targets for the quarter and warned of slowing hiring. Shares of Meta platforms followed Snap’s decline, down 7% in premarket trading, while Pinterest fell 14%.
Adam Crisafulli of Vital Knowledge wrote: “The stock market took a heavy hit this morning, and the culprit was Snap’s earlier warning. Some were a little skeptical that a relatively small, long-term unprofitable company But the ephemeral social media companies can bring the whole sentiment down.”
“Tech stocks are still dominating the market, both numerically (still the heaviest stocks) and psychologically, despite the massive clearing over the past few months, people are still holding a lot of tech stocks,” he added. road.
Shares of major tech companies that rely on ad spending followed Snap lower. Alphabet fell 4%, Amazon fell 2%, and Apple and Netflix both fell more than 1%. “We expect all online advertising platforms to feel some of the impact of a sharp drop in consumers. The advertising industry is cyclical,” Morgan Stanley analysts wrote after Snap’s warning.
Meanwhile, Zoom Video rose 6% after it issued strong second-quarter guidance.
Retail industry earnings will continue to be released this week, with investors eager to see how much higher inflation is affecting consumer demand and whether the disappointing performance of big retailers last week is a singular phenomenon or a reflection of the industry as a whole.
The previous day, the market rebounded after last week’s rout. The Dow suffered an eight-week losing streak last week, and the S&P 500 fell into bear market territory at one point. Stocks rebounded in regular trading Monday after a week of sharp losses, with the Dow up 618 points, or nearly 2%. The S&P 500 rose 1.9% and the Nasdaq Composite gained 1.6%.
The move, however, has investors wondering whether the rally will last, or if it’s just another small relief rally before the ongoing sell-off has bottomed out.
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