S&P 500 pulls back and warns Snap drags tech as Nasdaq loses 2%

The Nasdaq Composite Index fell on Tuesday as fears of Snap’s dismal warning spread to other technology names, while the Dow Jones Industrial Average rose to close from today’s lows.

The tech-heavy Nasdaq fell 2.4% to 11264.45. The S&P 500 fell 0.8% to 3,941.48. Meanwhile, the Dow added 48.4 points, or 0.2%, to 31,928.62 points. It fell as much as 1.6% earlier in the session.

The blue-chip index got a boost from UnitedHealth Group, which jumped 1.1% before the close. Dow Components McDonald’s, Verizon and IBM added more than 2%.

The 10-year Treasury yield made a surprising downward move as investors feared a recession and swarmed with bonds driving up their prices. The 10-year Treasury yield fell to about 2.73% on Tuesday after hitting 3% earlier this year.

Technology stocks led losses today as investors feared a slowdown in digital advertising after a warning from social media company Snap. Its shares fell 43% after the company said it was preparing to miss its earnings and revenue targets in the current quarter and warned of a hiring dip. Meta Platforms followed the Snap index lower, falling 7.6%. Google’s Alphabet stock fell 5% and reached a new 52-week low.

“The main culprit is Snap’s warning from Monday evening,” Vital Knowledge’s Adam Crisavoli wrote in a note. “Some are a little unbelievable that a relatively small and not perpetually profitable social media company can remove tape entirely, but given how sensitive that tape is, SNAP is able to strike over its own weight.”

“Technology still dominates the market, both numerically (it’s the biggest weight) and psychologically, and despite the violent liquidation in the last couple of months, people still own a lot of it,” he added.

Amazon stock also fell to a new 52-week low, and shares ended the day 3.2% lower. Apple drops 1.9%.

“We expect all online advertising platforms to feel some impact from the significant consumer downturn,” Morgan Stanley analysts wrote after Snap’s warning. Periodic advertising.

Tuesday’s negative reversal followed a rally in stocks on Monday as the Dow jumped 618 points, or nearly 2%. The S&P 500 is up 1.9%, and the Nasdaq Composite is up 1.6%. The brief bounce came as the market was mired in relentless selling with the Dow Jones down for 8 consecutive weeks and the S&P 500 briefly reaching bear market territory on Friday.

Billionaire hedge fund manager Bill Ackman said in a slew of tweets on Tuesday that with inflation spiraling out of control, aggressive interest rate increases by the Federal Reserve were the only way to tame it and that investors would eventually prefer those measures to avoid an “economic and demand meltdown.” .destruction.”

“If the Fed doesn’t do its job, the market will do its job, and that’s what’s happening now,” Ackman said. “The only way to stop hyperinflation today is a strong monetary tightening or a meltdown in the economy.”

The S&P 500 settled 18.2% off its record after falling more than 20% from its one-point high on Friday. The Dow’s losing streak is the longest since 1923.

Besides technology stocks, the sell-off was driven by losses in the retail sector after weak earnings and expectations from Target and Walmart last week. Investors received more bad news from that industry on Tuesday as Abercrombie & Fitch fell 28.6% after reporting that shipping and product costs affected fiscal first-quarter sales.

Best Buy shares ended the day 1.2% higher after the company reported a mixed quarter.

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