Stock is set for its worst single-day drop
Author of the article:
Reuters
Devik Jain and Anisha Sircar
A monitor displays Snap Inc. signage on the floor of the New York Stock Exchange. Photo by Michael Nagle/Bloomberg Wall Street’s main indexes fell on Tuesday, with the tech-heavy Nasdaq leading the slump, as a weak earnings forecast from Snapchat-owner Snap Inc added to nerves about an inflation-struck economy.
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Snap Inc plummeted 39.7 per cent, dragging down several social media and internet stocks, after the company slashed its second-quarter earnings forecast and said the economy had worsened faster than expected in the last month.
The stock was set for its worst single-day drop.
Twitter Inc, Google-owner Alphabet Inc, Meta Platforms Inc and Pinterest Inc, which rely heavily on advertising revenue, fell between 3.0 per cent and 24.8 per cent.
“Snap is a proxy for online advertising and when you see weakness there then you automatically think Facebook, Pinterest and Google,” Dennis Dick, a trader at Bright Trading LLC in Las Vegas, said.
“The back half of the earnings season has seen major disappointments. Expectations are a lot lower, but these companies seem to be finding a way to even get under the lower bar.”
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Nine of the 11 major S&P sectors declined in morning trade after rising broadly in the previous session. The communication services sector slid 5.2 per cent.
Wall Street rebounded on Monday from a steep selloff last week that saw both the S&P 500 and the Nasdaq mark their longest streak of weekly declines since the dotcom bust in 2001 on mounting concerns about a recession.
Data showed U.S. business activity slowed moderately in May as higher prices cooled demand for services, while renewed supply constraints because of COVID-19 lockdowns in China and the ongoing conflict in Ukraine hampered production at factories.
“Yesterday’s rally and Friday’s action suggested that the market hit a near-term bottom, but there’s still a lot of negative sentiment … (macro worries) are a big part of this decline,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
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At 10:06 a.m. ET, the Dow Jones Industrial Average was down 246.25 points, or 0.77 per cent, at 31,633.99, the S&P 500 was down 70.15 points, or 1.77 per cent, at 3,903.60, and the Nasdaq Composite was down 376.45 points, or 3.26 per cent, at 11,158.83.
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Article content Abercrombie & Fitch Co slumped 27.2 per cent after the apparel retailer trimmed its annual sales and margins outlook, citing a surge in freight and raw material costs.
Zoom Video Communications Inc inched up 0.9 per cent after raising its full-year profit forecast on strong enterprise demand.
The CBOE volatility index, also known as Wall Street’s fear gauge, rose to 29.24 points.
Declining issues outnumbered advancers for a 2.96-to-1 ratio on the NYSE and a 4.46-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 37 new lows, while the Nasdaq recorded five new highs and 237 new lows.
© Thomson Reuters 2022
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