Stocks dipped on Tuesday as investors tried to sustain a resurgence after weeks of losses.
The Dow Jones Industrial Average dropped 172 points, or 0.5 percent, on Wednesday. The S&P 500 fell 1.4 percent, while the Nasdaq Composite fell 2.7 percent.
Snap’s stock dropped more than 36% after the firm warned that it expects to fail profit and revenue forecasts in the current quarter and that hiring will stall. Snap’s stock dropped 6%, while Meta Platforms’ stock dropped 17 percent.
“Stocks are taking a beating this morning, and the major culprit is the Snap warning from Monday evening,” writes Vital Knowledge’s Adam Crisafulli. “Some may be skeptical that a small, always unprofitable ephemeral social networking startup can take down the entire tape, but considering how sensitive this tape is, SNAP punches far above its weight.”
“Tech continues to dominate the market, both statistically (it still has the largest weighting) and psychologically, and despite intense liquidation in recent months, people still own a lot of it,” he noted.
Snap’s stock fell alongside that of other major tech companies. Alphabet and Netflix both fell by nearly 6%. Amazon was down 3%, while Apple was down more than 1%.
After Snap’s warning, Morgan Stanley analysts stated, “We expect all online ad platforms to face some impact of a large consumer pullback.” “Advertising follows a cycle.”
This week’s retail earnings will continue, and investors will be watching to see how rising inflation affects consumer demand. They also want to hear if last week’s big-box store disappointments were unique to that business or reflected across the industry.
Abercrombie & Fitch’s stock plunged 27% on Tuesday after the company reported that freight and product expenses dragged on sales in the fiscal first quarter. Best Buy’s stock jumped after the business reported a mixed quarter, but it ended the day down less than 1%. During Monday’s relief surge, retailers were among the top gainers in the S&P 500.
The developments come a day after the market recovered from last week’s sharp sell-off, which saw the Dow hit an eight-week losing run for the first time since 1923 and the S&P 500 briefly enter bear market territory on an intraday basis.
Following a week of steep losses, stocks surged Monday, with the Dow jumping 618 points, or about 2%. The S&P 500 increased by 1.9 percent, while the Nasdaq Composite increased by 1.6 percent. Investors are wondering if the rebound will last or if it is just another brief relief rally amid the persistent sell-off that has yet to strike a bottom.
“This kind of climate with the whipsaw and such large ups and downs is a trading environment where it might feel like you were wrong yesterday on any given day, and that is ripe for mistakes,” Liz Young, Sofi’s head of investment strategy, told CNBC’s “Closing Bell: Overtime.”
New home sales and Fed Chair Jerome Powell’s address at the National Center for American Indian Enterprise Development summit on Tuesday are attracting investors’ attention. After the bell, Nordstrom and Urban Outfitters will announce earnings.