Stocks fell on Tuesday as investors returned to dumping stocks on fears of a recession after a brief sell-off.
The Dow Jones Industrial Average fell 443 points, or 1.4 percent. The S&P 500 lost 2.3%, and the heavy Nasdaq Composite fell 3.5%.
The selling was broad on Tuesday as 457 S&P 500 members fell. The 10-year Treasury yield made a surprising downward move as investors feared stagnation in bond crowding pushed up their prices. The 10-year Treasury yield fell way back to 2.73% on Tuesday after climbing to 3.21% earlier this year.
Technology stocks led losses on fears of a slowdown in digital advertising after a warning from social media company Snap. Its shares fell more than 41% after the company said it was preparing to miss its profit and revenue targets in the current quarter and warned of a hiring slowdown. Meta Platforms Snap followed lower, dropping nearly 10%. Google’s Alphabet is down 8% to 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 fell nearly 5% and hit a new 52-week low. Apple drops 3%.
“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.
The S&P 500 settled 19% off its record after dropping more than 20% from its high sometime 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 27% after reporting that shipping and product costs affected fiscal first-quarter sales.
Best Buy’s stock initially popped after the company reported a mixed quarter, but it was less than 1% last time. Retailers were among the biggest gainers in the S&P 500 during Monday’s recovery.
“This kind of environment where you have a huge impact and very big up and down volatility is a trading environment where on any given day you can feel like you were wrong yesterday and that’s a good fit for making mistakes,” Sofi’s head of investment strategy told Liz Young. Closing: Overtime” on CNBC.
Investors look forward to new home sales and Federal Reserve Chairman Jerome Powell’s speech at the National Center for American Indian Enterprise Development Summit on Tuesday. Nordstrom and Urban Outfitters will report earnings after the bell.