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S&P 500 and Nasdaq retreat in volatile session as tech stocks drop

US stock indices fell and the sell-off deepened in technology stocks as investor concerns about economic growth and rising interest rates continued to weigh on the markets.

The S&P 500 was down 1.2% on Tuesday afternoon. The heavy Nasdaq Composite Index fell 2.6%, while the Dow Jones Industrial Average lost 0.2%. The three indices rose in the afternoon after falling in the morning trading.

Investors are studying a range of signals as they try to determine the course of the US economy. Many have grown concerned that the Fed’s plans to tighten monetary policy to curb inflation could push the economy into recession.

Ross Koestrich, who co-manages the global allocation fund for

Black stone.

“This time around, it’s obviously difficult for the Fed to bail out given the fact that they have a lot of work to do to bring down inflation.”

Tuesday’s losses indicate a sharp decline from Monday, When the major US indices rebounded After a choppy trading session last week. But late on Monday Profit and revenue warning From a social media company

Explode, Explode

Investor sentiment soured once again. Disappointing report on Tuesday appears US new home sales slow in April More dim mood.

Snap shares fell 44% on Tuesday afternoon as investors digested statements that the macroeconomic environment had deteriorated more than expected. Concerns about the turmoil in Snap ad revenue spilled over to other tech stocks that have been hit this year.

ID pads

Shed 7.9% and Google Parent

the alphabet

It decreased by 5.1%.

Meanwhile, home sales data, which falls far short of economists’ expectations, is another sign that Fed rate increases are already slowing the real economy, according to Stephen Ricciotto, chief economist at Microsoft.

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Mizuho

Securities USA.

“It’s a very weak number,” he said, noting that the trend is a sign that more home buyers are exiting the market as the Increased interest rates on mortgages.

Concerns about slowing growth amid rising inflation were among the catalysts that pushed the S&P 500 index down 17% through Monday from its January high. Investors are now watching closely whether the S&P 500 enters bear market territory, defined as a drop of at least 20% from its recent high. On Friday, the benchmark index came close to ending in a bear market before it was A rally saved her late in the session.

On Tuesday, with big tech companies taking a beating, stocks with a greater foothold in the physical economy incurred smaller losses or gains. S&P 500 sectors such as consumer goods, energy and real estate found a foothold in positive territory in the afternoon.

Tim Courtney, chief investment officer at Exencial Wealth Advisors, took this as an indication that inflation, and the Fed’s response, remain a greater concern for many investors than the underlying health of the economy.

Mr. Courtney said wealth management clients have been taking the stock market slowdown in stride this year, but as bear market levels approached for the S&P 500, their fear arose.

“Last week, as we got close to the magic bear market barrier, I think the fears started to build up,” he said.

Tuesday’s sell-off in technology stocks prompted investors to buy government bonds, as the yield on the 10-year US Treasury fell to 2.756% from 2.857% on Monday. A bond’s yield decreases when its price increases.

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BlackRock’s Koestrich said the turbulent trading in the stock and bond markets this year has led his team to hold more cash in the fund’s portfolio.

“The volatility in the interest rate markets has been a big reason for the volatility of the equity markets,” he said. “In that environment, cash becomes one of the most effective risk mitigators.”

Disappointing gains and warnings across the corporate landscape added to concerns.

Abercrombie and Fitch

The latest retailer Tuesday became dampening investor sentiment after turning into a loss in the first quarter amid rising costs. The company’s shares plunged 31%.

Mizuho’s Ricchiuto warned that as more analysts accept the Fed’s strong determination to control inflation, Wall Street’s outlook for corporate earnings could weaken further, sending stock prices lower.

However, there were glimmers of optimism. on Monday,

c. B. Morgan Chase

She said American consumers appear to be in good financial health. But this optimistic portrayal was soon counterbalanced by the revelation of Snap, a company that has Never issued a revenue warning before.

“We’re going to take this fast ride for a while, as investors cling to more optimistic data points and catch fresh disappointments when another downbeat reading comes in,” said Susanna Streeter, senior investment and markets analyst at Hargreaves Lansdown. . “We don’t yet know the full trajectory of higher interest rates or how flexible consumers will be.”

Despite Tuesday’s broad tech sell-off, there were bright spots in the market.

Zoom video communication

It rose 4.6% after the video conferencing service company It raised its earnings forecast.

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Gold, another haven asset, rose 0.9% to $1,864.40 an ounce.

Traders worked on the floor of the New York Stock Exchange on Monday.


picture:

Spencer Platt / Getty Images

Brent crude, the global benchmark for oil, rose 0.2% to $113.69 a barrel.

“You’ve got that push and pull with oil prices – oil prices are being kept fairly low because of global growth, which is not a huge indicator of the health of the global economy,” Ms Streeter said. “But at the same time, it didn’t go down any further due to concerns about a lack of supply.”

In Europe, the Stoxx Europe 600 lost 1.1%. In Asia, Hong Kong’s Hang Seng is down 1.7%. Japan’s Nikkei 225 lost 0.9% while China’s Shanghai Composite fell 2.4%.

Write to Caitlin McCabe at [email protected] and Matt Grossman at [email protected]

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