U.S. stocks fell sharply on Tuesday, bringing the S&P 500 back to bear market after a series of sharp sales resumed on Wall Street.
The S&P 500 fell 2.1% and the Dow Jones Industrial Average fell 400 points, or 1.3%. Nasdaq Composite fell 3.3% amid renewed pressure on technology stocks after the disappointing prospect of social media platform Snap (SNAP), which cut the company’s stock by as much as 40%, putting it at a pace for its biggest one day falls on record.
The moves prolong a series of sharp fluctuations in shares after a short delay on Monday, but are based on a broader downward trend amid months of sales on Wall Street. Monday’s close marked just the 13th of 98 trading days this year, according to Bespoke Investment Group, the S&P 500 closed in positive territory.
The decline in shares on Tuesday was caused by the pressure of technology stocks, after the CEO of Snap Inc. Evan Spiegel lowered the company’s forecast, citing rising inflation and interest rates, supply chain constraints and workforce disruptions.
The fall of Snap also dragged down other technology colleagues. Shares of Meta Platforms (FB) fell by as much as 10% and shares of Alphabet (GOOG) fell by 6%.
The social media giant is the latest in a growing group of US companies to lower their forecasts for fears that macroeconomic pressures are poised to weigh on margins. Last week, a number of disappointing profits from large retailers confirmed fears that inflation and continuing supply chain problems are hitting corporate balance sheets.
“There should have been some payout from the pandemic-induced profit spike that many companies have experienced, but that payout may be higher than originally thought,” said Brian Jacobson, senior investment strategist at Allspring Global Investments, in an e-mail note. . “Businesses have to deal with higher investment costs, consumers overwhelmed by high prices and changing cost patterns.”
During the first quarter earnings season, 338 of the 460 companies in the S&P 500 that have reported results so far cited the term “supply chain” in talks with investors – the third highest number since 2010, at least. according to a study by FactSet. With results expected this week from usernames including Macy’s (M), Dick’s Sporting Goods (DKS) and Ulta Beauty (ULTA), Wall Street is gearing up for more bad news.
The story continues
A selection of economic data is also in the queue for investors until Friday, with a second estimate of US GDP for the first quarter due later this week, along with a new reading on monthly personal consumption expenditure (PCE), the preferred inflation rate. Federal Reserve measure.
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10:58 AM ET: New home sales are falling to their lowest level since early 2020
New home sales in the United States fell the most in nearly nine years to the lowest mark since the COVID-19 pandemic began. The decline comes as rising construction costs and rising mortgage interest rates weigh on affordability.
New home sales in the United States fell 16.6% per month to a seasonally adjusted annual rate of 591,000 in April 2022. The figure is the lowest in two years and is below 750,000 economists polled by Bloomberg who expected .
The sales rate in March was also revised down to 709,000 units from the 763,000 units reported earlier.
“The macroeconomic environment has deteriorated faster than we thought only a month ago, with sales of new homes falling under the weight of higher financing costs and housing appraisals, where even the price of gas that home buyers put in the car to move around new homes, it grows, “FWDBONDS chief economist Christopher Rupki said in a note.
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9:34 a.m. ET: Shares resume losses as sharp sales continue on Wall Street
Here are the main movements in the markets at the beginning of trading on Tuesday:
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S&P 500 (^ GSPC): -40.20 (-1.01%) to 3,933.55
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Dow (^ DJI): -141.29 (-0.44%) to 31,738.95
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Nasdaq (^ IXIC): -209.61 (-1.82%) to 11,325.66
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Crude oil (CL = F): -0.20 $ (-0.18%) to $ 110.09 per barrel
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Gold (GC = F): + $ 11.50 (+ 0.62%) to $ 1859.30 per ounce
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10-year treasury (^ TNX): -4.9 bps for 2.8100% yield
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8:30 a.m. ET: Abercrombie shares fall after earnings
Shares of Abercrombie & Fitch (ANF) fell as much as 25% in pre-market trading after the company lowered its full-year forecast in its latest quarterly report.
For the whole of 2022, the company now expects sales growth to fall within an equal limit of only 2%, which is lower than the earlier forecast for sales growth of 2% -4%. In lowering its forecast, the company cited “the adverse effects of foreign currency and the projected inflationary impact on consumer demand.”
After a 4% increase in sales in the first quarter, ANF expects sales for the second quarter to fall by “low single digits” compared to the previous year. The company attributes this decline to the impact of the COVID-related blockade in China, as well as the negative impact of inflation on consumer habits.
“Looking ahead, we expect higher costs to remain an obstacle at least until the end of the year,” CEO Fran Horowitz said in a statement on the company’s revenue.
“We expect cargo relief in the fourth quarter as we mark the anniversary of increased air use last year due to the shutdown in Vietnam. We will continue to strictly manage costs and commit to finding ways to offset those costs while protecting strategic investments in marketing, technology and our customer experience, which should drive sustainable, long-term sales growth. “
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7:17 a.m. ET: Futures point to continued losses after a sharp drop in the forecast
Here is where stock futures traded before the market on Tuesday:
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S&P 500 futures (ES = F): -41.00 (-1.03%) to 3,930.75
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Dow futures (YM = F): -200.00 (-0.63%) to 31,639.00
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Nasdaq futures (NQ = F): -195.50 (-1.62%) to 11,839.75
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Crude (CL = F): + $ 0.41 (+ 0.37%) to $ 110.70
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Gold (GC = F): + $ 8.50 (+ 0.46%) to $ 1856.30 per ounce
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10-year treasury (^ TNX): +7.2 bps for 2.8590% yield
NEW YORK, NEW YORK – MAY 23: People walk the New York Stock Exchange (NYSE) on May 23, 2022 in New York. After a week of sharp losses, markets rose in trading on Monday morning. (Photo by Spencer Platt / Getty Images)
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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