U.S. stocks were mostly lower Tuesday after social media giant Snap Inc. (SNAP) logged its biggest one-day drop on record and dragged down shares of technology peers.
The Nasdaq Composite tumbled 2.3% to its lowest close since November 2020 following an economic warning from the social media platform that sent the company's stock down 43% and spurred a sell-off in the broader tech sector. The S&P 500 fell 0.8%, placing the index back on track toward a bear market following a brief reprieve to start the week. The Dow Jones Industrial Average gained 50 points after reversing earlier losses in the final hour of trading.
The downturn comes after Snap Inc. CEO Evan Spiegel slashed the company’s forecast, citing rising inflation and interest rates, supply chain constraints and labor disruptions.
Snap's fall also spurred a sell-off in technology peers. Shares of Meta Platforms (FB) fell 7.6%, and shares of Alphabet (GOOG) declined 5% to a 52-week low.
The moves extend a streak of wild swings in equities following a brief reprieve Monday but build on a broader downward trend amid months of selling on Wall Street. Monday’s close marked only the 13th time of 98 trading days this year the S&P 500 closed in positive territory, according to data from Bespoke Investment Group.
The social media giant is the latest among a growing docket of U.S. companies downgrading their outlooks over concerns macroeconomic pressures are poised to weigh on margins. Last week, a bevy of disappointing earnings from major retailers affirmed fears that inflation and continued supply chain issues are hitting corporate balance sheets.
“There was bound to be some payback from the pandemic-induced profit surge a lot of companies experienced, but that payback might be bigger than originally thought,” Brian Jacobsen, senior investment strategist at Allspring Global Investments said in an emailed note. “Businesses have to deal with higher input costs, consumers crimped by high prices, and shifting spending patterns.”
During the first quarter earnings season, 338 of 460 companies in the S&P 500 that have reported results so far cited the term “supply chain” during calls with investors – the third highest number of times since at least 2010, research from FactSet indicated. With results due out this week from consumer names including Macy’s (M), Dick's Sporting Goods (DKS), and Ulta Beauty (ULTA), Wall Street is bracing for more bad news.
On the economic front, sales of new U.S. homes dropped by the most in nearly nine years to the lowest print since the start of the COVID-19 pandemic. The decline comes as elevated construction costs and rising mortgage rates weigh on affordability.
More data out of Washington is in the queue for investors through Friday, with a second estimate of first-quarter U.S. GDP due out later this week, along with a fresh read on monthly personal consumption expenditures (PCE), the Federal Reserve's preferred inflation measure.
Gold (GC=F): +$16.80 (+0.91%) to $1,864.60 per ounce
10-year Treasury (^TNX): -12.4 bps to yield 2.7350%
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10:58 a.m. ET: New home sales fall to lowest since early 2020
Sales of new U.S. homes dropped by the most in nearly nine years to the lowest print since the start of the COVID-19 pandemic. The decline comes as elevated construction costs and rising mortgage rates weigh on affordability.
New home sales in the United States sank 16.6% month-over-month to a seasonally adjusted annual rate of 591,000 in April of 2022. The figure marks the lowest print in two years and comes in below the 750,000 economists surveyed by Bloomberg had anticipated.
The pace of sales in March was also downwardly revised to 709,000 units from the 763,000 units previously reported.
"The macroeconomic environment has deteriorated faster than we thought just a month ago with new home sales tumbling lower under the weight of higher financing costs and home valuations where even the cost of the gas home buyers put in the car to tour new homes is soaring," FWDBONDS chief economist Christopher Rupkey said in a note.
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9:34 a.m. ET: Stocks resume losses as sharp selling continues on Wall Street
Here were the main moves in markets at the start of trading Tuesday:
For the full year 2022, the company now expects sales growth will fall within a range of flat to up just 2%, down from an earlier forecast for sales growth of 2%-4%. In cutting its forecast, the company cited the "adverse impact from foreign currency and an assumed inflationary impact on consumer demand."
After a 4% increase in sales during the first quarter, ANF expects Q2 sales will fall in the "low-single-digits" compared to the prior year. The company attributed this decline to the impact from COVID-related lockdowns in China as well as the negative effect inflation is having on consumer habits.
"We expect freight relief in the fourth quarter as we anniversary increased air usage last year due to the Vietnam shutdown. We will continue to manage expenses tightly and are committed to finding opportunities to offset these costs while protecting strategic investments in marketing, technology and our customer experience, which should drive sustained, long-term sales growth.”
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7:17 a.m. ET: Futures point to continued losses after Snap slashes forecast
Here's where stock futures were in pre-market trading Tuesday:
S&P 500 futures (ES=F): -41.00 (-1.03%) to 3,930.75
Gold (GC=F): +$8.50 (+0.46%) to $1,856.30 per ounce
10-year Treasury (^TNX): +7.2 bps to yield 2.8590%
NEW YORK, NEW YORK - MAY 23: People walk by the New York Stock Exchange (NYSE) on May 23, 2022 in New York City. After a week of steep losses, markets were up in Monday morning trading. (Photo by Spencer Platt/Getty Images) ·Spencer Platt via Getty Images
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
