The Nasdaq Composite fell on Tuesday as fears of Snap’s bleak warning spread to other tech names, while the Dow Jones Industrial Average bounced back to close its day low.
The highly technological Nasdaq fell 2.4% to 11,264.45. The S&P 500 was down 0.8% to 3,941.48. Meanwhile, the Dow added 48.4 points, or 0.2%, to 31,928.62. It fell to 1.6% before the session.
The top-tier stock index received a boost from UnitedHealth Group, which rose 1.1% before closing. Components from Dow McDonald’s, Verizon and IBM added more than 2%.
The 10-year Treasury yield made a sudden downward move as investors, who feared a recession, rallied on bonds to drive up their prices. The 10-year Treasury yield fell to 2.73% on Tuesday after surpassing 3% earlier this year.
Shares of technology companies led the day’s losses as investors feared a slowdown in digital advertising following a warning from social media company Snap. Its shares plummeted 43% after the company said it was preparing not to meet its earnings and revenue targets during the current quarter and warned of a drop in hiring. Meta platforms followed the decline of Snap, with a fall of 7.6%. Google’s Alphabet fell nearly 5% to a new 52-week low.
“The main culprit is Monday night’s Snap warning,” Adam Crisafulli of Vital Knowledge wrote in a note. “Some are a little incredulous that a relatively small, perpetually unprofitable ephemeral social media company can remove the entire tape, but given how sensitive that tape is, SNAP is able to hit above its weight.”
“Technology still dominates the market, both numerically (it is the highest weighting) and psychologically, and despite the aggressive liquidation of the last two months, people still have a lot of it,” he added.
Amazon also fell to a new 52-week low and shares ended the day with a 3.2% drop. Apple lost 1.9%.
“We expect all online advertising platforms to feel some impact from a major consumer pullback,” Morgan Stanley analysts wrote after Snap’s warning. “Advertising is cyclical.”
Tuesday’s negative reversal came after stocks rebounded on Monday as the Dow rose 618 points, or nearly 2%. The S&P 500 was up 1.9% and the Nasdaq Composite was up 1.6%. The brief rebound came as the market lay in a relentless sell-off with the Dow down for 8 weeks in a row and the S&P 500 briefly touching bear market territory on Friday.
Billionaire hedge fund manager Bill Ackman said in a series of tweets on Tuesday that with uncontrolled inflation, aggressive Federal Reserve rate hikes are the only way to tame it and that investors they will eventually favor these measures to prevent “economic collapse and demand.” destruction “.
“If the Fed doesn’t do its job, the market will do the Fed’s job, and that’s what’s happening now,” Ackman said. “The only way to stop today’s furious inflation is by aggressive monetary tightening or the collapse of the economy.”
The S&P 500 is at 18.2% of its record after falling more than 20% from its high at some point on Friday. The Dow’s loss streak is the longest since 1923.
Along with technology stocks, the sell-off has been driven by losses in the retail sector following Target and Walmart’s weak gains and outlook last week. Investors received poorer news from the industry on Tuesday with Abercrombie & Fitch falling 28.6% after reporting that transportation and product costs weighed on first-quarter sales.
Shares of Best Buy ended the day up 1.2% after the company reported a mixed quarter.