U.S. stock indexes opened lower and a selloff in technology stocks deepened, weighed down by growing investor concerns about the outlook for economic growth.
The S&P 500 fell 1.0% Tuesday, while the Dow Jones Industrial Average lost 0.5%. Contracts for the tech-heavy Nasdaq Composite slid 1.8%.
The losses point to a sharp turnaround from Monday, when major U.S. indexes rallied after a volatile trading session the previous week. But a profit and revenue warning later on Monday from social-media company
Snap
sent investor sentiment souring again. Asian indexes broadly fell amid declines in technology stocks. European markets also traded lower.
Snap’s shares fell 34% premarket Tuesday as investors digested comments that the macroeconomic environment has deteriorated more than expected. Worries about disruptions to Snap’s advertising revenue rippled to other tech stocks that have been battered this year.
Meta Platforms
shed 8.1% before the opening bell and Google-parent
Alphabet
fell 4.4%.
Investors are confronting a range of signals as they try to map out the trajectory of the U.S. economy. Many have grown worried that the Federal Reserve’s plans for monetary tightening to tamp down inflation could tip the economy into a recession.
Disappointing earnings and warnings across the corporate landscape have exacerbated those fears.
Abercrombie & Fitch
became the latest retailer Tuesday to dent investor sentiment after it swung to a first-quarter loss amid higher costs. The company’s shares tumbled 31% premarket.
Worries about slowing growth amid higher inflation have been among the catalysts that have sent the S&P 500 falling 17% through Monday from its January high. Investors are now keeping a close watch on whether the S&P 500 enters bear market territory, defined as a drop of at least 20% from a recent high. On Friday, the benchmark index came close to finishing in a bear market, though it was saved by a late-session rally.
There have been glimmers of optimism, however, such as on Monday, when
JPMorgan Chase
said U.S. consumers appear to be in good financial health. But that sanguine depiction was quickly counterbalanced by the disclosure from Snap, a company that had never issued a revenue warning before.
“We’re going to have this roller-coaster ride for some time, as investors cling onto more optimistic data points and get fresh disappointment when there’s another downbeat reading coming through,” said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. “We don’t yet know the full path of interest-rate rises or how resilient consumers will be.”
Despite Tuesday’s broad premarket technology selloff, there were bright spots in the market.
Zoom Video Communications
advanced 4.9% before the opening bell after the videoconferencing services company raised its profit outlook.
Later Tuesday, Fed Chairman
Jerome Powell
will give remarks at an economic summit in Las Vegas. Investors will be looking for fresh clues about his outlook for inflation, the economy and the path of interest-rate increases.
Several pieces of economic data are also due Tuesday, including U.S. new-home sales data and gauges of U.S. manufacturing activity. Earlier Tuesday, data firm S&P Global said its Purchasing Managers Index for the eurozone’s services and manufacturing sectors fell in May from the month before. Factories in Europe and Japan reported a weakening of new orders amid higher costs and prices, a sign that manufacturing output will slow further over coming months.
Tuesday’s selloff in technology stocks in the premarket session sent investors scooping up government bonds, with the yield on the benchmark 10-year U.S. Treasury note falling to 2.819%, from 2.857% Monday. Yields fall when bond prices rise.
Gold, considered another haven asset, advanced 0.3% to $1,853.70 a troy ounce.
Traders worked on the floor of the New York Stock Exchange on Monday.
Photo:
Spencer Platt/Getty Images
Brent crude, the international oil benchmark, rose 0.2% to $113.66 a barrel, reversing losses from earlier in the session.
“You’ve got this push and pull with oil prices—oil prices are being kept down somewhat by global growth, which is not a great signifier for the health of the global economy,” Ms. Streeter said. “But at the same time, it’s not dropping any further because of concerns about tight supply.”
In Europe, the pan-continental Stoxx Europe 600 lost 0.6%. In Asia, Hong Kong’s Hang Seng fell 1.7%. Japan’s Nikkei 225 lost 0.9% while China’s Shanghai Composite declined 2.4%.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com
Copyright ©2022 Dow Jones & Company, Inc. All Rights Reserved. 87990cbe856818d5eddac44c7b1cdeb8