Stock Market

Tech rout set to drag Wall Street lower, as Snap warning drags Facebook, Google, Twitter lower in premarket

The technology sector was seen dragging Wall Street down on Tuesday, with Nasdaq-100 index futures tumbling after a warning from Snapchat parent Snap, whose shares slumped in premarket.

How are stock-index futures trading?
  • S&P 500 futures
    ES00,
    -1.11%

    fell 48 points, or 1.2%, to 3,923

  • Dow Jones Industrial Average futures
    YM00,
    -0.72%

    slumped 242 points, or 0.7%, to 31,593

  • Nasdaq-100 futures
    NQ00,
    -1.71%

    tumbled 223 points, or 1.8%, to 11,812

U.S. stocks finished higher on Monday, with the Dow industrials surging 618.34 points, or 2%, to 31,880.24. The S&P 500 
SPX,
+1.86%

rose 1.9% to 3,973.75 and the Nasdaq Composite 
COMP,
+1.59%

gained 1.6% to 11,535.27.

What’s driving the markets?

Monday’s climb for stocks followed the Dow industrials’ longest stretch of weekly losses since 1932 and a temporary dip by the S&P 500 index into bear-market territory last week.

But the Nasdaq Composite has led major indexes with year-to-date losses, down 26% and off 28% from its 52-week high of 16,057.44 reached Nov. 19, 2021. A drop of 20% or more from a recent high is one technical definition of a bear market.

Snap
SNAP,
-3.40%

shares slumped 30% in premarket trading Tuesday after the social-media company warned late Monday that it would likely miss quarterly estimates as the economy has “deteriorated further and faster than anticipated.”

“That’s stopped all the ‘worst is over’ pundits in their tracks. It highlights how fleeting swings in sentiment are now and that investors are running at the first sign of trouble,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.

Other tech companies that rely on advertising as a revenue stream were also getting battered in premarket, with Facebook parent Meta Platforms Inc.
FB,
+1.39%

down nearly 6%, Pinterest Inc. 
PINS,
-1.40%

tumbling 11%, Google parent Alphabet
GOOGL,
+2.37%

off 3.8% and Twitter Inc. 
TWTR,
-1.12%

 off around 4%.

The technology sector has particularly suffered this year as shares of companies that shot to popularity during the pandemic have retrenched amid a shifting economy. Also extremely sensitive to interest rates, the sector has also been unraveling in anticipation of higher rates from the Federal Reserve.

“The market continues to turn itself inside out and back to front as it tries to decide if it has priced all of the impending rate hikes, soft landing or recession, inflation or stagflation, China, Ukraine, US summer driving season, supply chains, the list goes on. The result is a day-to-day chop-fest, and it seems clear that volatility is the winner,” said Halley.

Opinion: Snap’s warning of a weaker outlook sends ripples through tech stocks

Investors may be looking for more policy clues from Fed Chairman Jerome Powell, who is due to give opening remarks at a Native American development conference at 12:20 p.m. Eastern Time. New home sales for April are due at 10 a.m. Eastern.

Opinion:  ‘I feel like I am reliving the summer of 2008.’ Strategist David Rosenberg sees bear market sinking the S&P 500 to 3,300

Among a handful of earnings results due Tuesday, retailers Best Buy Co.
BBY,
+0.32%

and Nordstrom Inc.
JWN,
+1.27%

are due to report ahead of the open, followed by software group Intuit Inc.
INTU,
+0.98%

and diagnostics group Agilent Technologies Inc.
A,
+0.68%

after the close.

Oil prices
CL00,
+0.33%

were also lower and Treasury yields
TMUBMUSD10Y,
2.819%

were falling, along with the dollar
DXY,
-0.06%
,
while gold
GC00,
+0.47%

was higher.

Read: Guggenheim’s Minerd believes fine art, real estate will outperform stocks, sees bitcoin bottoming at $8,000

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