Dow falls nearly 600 points, Nasdaq collapses ahead of megacap technology gains

US stocks traded sharply lower on Tuesday afternoon, failing to build on the rebound from the previous session as investors reviewed many of the company’s results and awaited reports on profits to be received after the bell from technology giants, including Microsoft Corp. . and the parent of Google Alphabet Inc.

How are stock indices presented?

• The Dow Jones Industrial Average DJIA, -2.12%, fell 589 points, or 1.7%, to 33,460.

• The S&P 500 SPX, -2.44%, fell 83 points, or about 2%, to 4,212.

• Nasdaq Composite COMP, -3.47% lost 375 points, or 2.9% to trade at around 12,630.

Monday saw the biggest intraday turnover since February for the Dow, which rose 238 points, or 0.7%, wiping out a loss of nearly 500 points. The S&P 500 was up 0.6% and the Nasdaq Composite was up 1.3%.

Read also: US stocks ended the maniacal Monday in the green – but bounces during a day like this are not bullish

What drives the markets?

Shares sank on Tuesday afternoon, with all three key indicators falling after Monday’s rally.

“Investors are not necessarily sure” about the strength of the market, with “fragility” shown since the beginning of the year, said Aoifin Devit, CEO of Moneta, in a telephone interview on Tuesday. “There is this fear of slowing growth.”

The CBOE VIX volatility index, + 14.54%, jumped about 15% to about 31 Tuesday afternoon, according to FactSet. This compares to a 200-day moving average of about 21.

Consumer discretion SP500.25, -4.08%, information technology SP500.45, -2.79% and communication services SP500.50, -2.00% were the most affected sectors of the S&P 500 in the early afternoon trading on Tuesday , according to FactSet. Technology and communications services reported the strongest performance for the S&P 500 in the stock market rally on Monday.

“We now have that reward today,” DeWitt said. “Markets are trying to find a level.”

The S&P 500 traded close to its lowest level this year from 4,170.70 on March 8, according to Dow Jones Market Data. Nasdaq traded close to its lowest level since 2022 of 12,581.22, reached on March 14.

U.S. stocks were falling as investors entered the busiest week of the season to record U.S. corporate profits, drawing on the results of a number of corporate heavyweights published before the opening bell. They are also looking forward to the results of megacap technology companies Microsoft Corp. MSFT, -3.24% and Google parent Alphabet Inc. GOOG, -2.54% after the closing bell.

The technology giants are “big engines in the market,” Paul Nolte, portfolio manager at Kingsview Investment Management, said by telephone on Tuesday. Both the S&P 500 and the Nasdaq are “dramatically affected by technology.”

Shares of former senior Netflix NFLX -4.44% fell more than 40% after announcing last week that it had lost 200,000 subscribers in the first quarter.

While about 80% of companies that have reported quarterly earnings so far have exceeded profit expectations, including General Electric Co., United Parcel Service Inc. and Pepsico Inc., disappointing earnings forecasts affect equities.

Read: The first big Wall Street bank to call for a recession now sees a clear external risk that it could be “more serious”

According to US economic data, orders in US durables increased by 0.8% in March, and business investment recovered after the first decline in a year, indicating that the economy continues to grow at a steady pace. The increase in durable goods orders is in line with consensus expectations made by a study by economists at The Wall Street Journal.

A consumer confidence survey fell to 107.3 in April from 107.6, but Americans signaled they were optimistic enough about the economy to continue buying expensive items such as news cars and appliances.

S&P CoreLogic Case-Shiller’s housing price index in the 20 cities reported a 20.2% year-on-year increase in February, up from 18.9% the previous month, but new home sales in the US fell 8.6% to an annual rate of 763,000 in March, the government announced on Tuesday.

The Federal Reserve’s policy meeting next week, meanwhile, is burdening investors who expect the central bank to announce a large rate hike, potentially 50 basis points, in a bid to curb hot inflation, according to Nolte.

“The Fed will raise interest rates until something breaks and that will be the economy,” he said. “Concerns about the potential for a recession may increase.

Which companies are in focus?

• Twitter Inc. TWTR, -3.32% shares fell about 2.7% on Tuesday to about $ 50 after its board agreed on Monday to accept an offer from Tesla boss Elon Musk for $ 54.20 per share for the social media platform.

• The shares of 3M Co. MMM, -3.02% fell 2.8% after the manufacturer of leaflets for stickers and industrial equipment reported better-than-expected earnings for the first quarter.

• Shares of PepsiCo Inc. PEP, -0.04% rose 0.3% after providing profits and revenues that exceeded Wall Street forecasts.

• The shares of United Parcel Service Inc. UPS, -2.91% fell 2.6% after the package giant reported earnings and revenue for the first quarter that exceeded expectations.

• The shares of General Electric Co. GE, -10.91% fell 10.6% after the industrial conglomerate reported adjusted earnings and revenues for the first quarter, which exceeded expectations, but missed the free cash flow and provided slightly worse prospects.

• The shares of JetBlue Airways Corp. JBLU, -10.60% fell 10.1% after the airline reported less-than-expected loss and revenue, which doubled to meet forecasts, but said it planned to further reduce capacity growth, to help restore operational reliability. United Airlines Holdings Inc. UAL, -4.17% said on Tuesday it was launching the largest transatlantic expansion in its history with 30 new or renewed flights coming from mid-April to early June. Shares of United Airline fell 3.5%.

How are other assets doing?

• The yield on 10-year government securities TMUBMUSD10Y, 2.772% fell by about 5 basis points to about 2.77%. Yields and debt prices are moving against each other.

• The ICE US Dollar DXY index, + 0.56%, a measure of the currency against a basket of six major competitors, rose 0.5%.

• Bitcoin BTCUSD, -4.79% fell 4.6% to trade around $ 38,314.

• Oil futures CL.1, + 3.05% rose, as West Texas Intermediate oil for June CLM22, supply increased by + 3.05% by 2.8% to trade around $ 101.37 per barrel.

• For GC00 gold futures, + 0.11%, gold for June delivery GCM22, + 0.11% rose 0.1% to $ 1,898.10 an ounce.

• In European stocks Stoxx Europe 600 SXXP, -0.90% closed 0.9% lower, while the London FTSE 100 UKX, + 0.08% rose 0.1%.

• In Asia, the Shanghai Composite SHCOMP, -1.44% fell 1.4%, while the Hang Seng Index HSI, + 0.33% rose 0.3% in Hong Kong, and the Japanese Nikkei 225 NIK, + 0.41% increased by 0.4%.

-Steve Goldstein contributed to this report.