Nasdaq Pulls Back Sharply After Warning From Snap

(RTTNews) - Stocks moved mostly lower during trading on Tuesday, giving back ground following the strong upward move seen in the previous session. The tech-heavy Nasdaq showed a particularly steep drop on the day, ending the session at its lowest closing level since November of 2020.

The Nasdaq climbed off its worst levels of the day but still closed down 270.83 points or 2.4 percent at 11,264.45. The S&P 500 also slid 32.27 points or 0.8 percent to 3,941.48, while the narrow Dow managed to close modestly higher, up 48.38 points or 0.2 percent at 31,928.62.

A steep drop by shares of Snap Inc. (SNAP) weighed on the tech sector, with the Snapchat parent plummeting by 43.1 percent to a two-year closing low.

The plunge by Snap comes after the company warned of weaker than expected second quarter results, saying the "macroeconomic environment has deteriorated further and faster than anticipated."

Weakness overseas also carried over onto Wall Street, as a broad package of Chinese measures to support the economy underwhelmed investors.

The pullback also came amid lingering concerns aggressive interest rate hikes by the Federal Reserve could lead to a recession.

On Wednesday, the Fed is due to release the minutes from its latest monetary policy meeting, which may shed additional light on the outlook for rates.

Adding to the negative sentiment on Wall Street, the Commerce Department released a report showing a much steeper than expected drop in new home sales in the month of April.

The report showed new home sales plunged by 16.6 percent to an annual rate of 591,000 in April after tumbling by 10.5 percent to a revised rate of 709,000 in March.

Economists had expected new home sales to slump 1.7 percent to a rate of 750,000 from the 763,000 originally reported for the previous month.

With the much bigger than expected decrease, new home sales dropped to their lowest annual rate since hitting 582,000 in April of 2020.

Sector News

Airline stocks turned in some of the market's worst performances on the day, resulting in a 4.6 percent nosedive by the NYSE Arca Airline Index.

Reflecting the weakness in the tech sector, the Philadelphia Semiconductor Index and the NYSE Arca Computer Hardware Index also tumbled by 2.5 percent and 2.2 percent, respectively.

The disappointing new home sales data also contributed to considerable weakness among housing stocks, with the Philadelphia Housing Sector Index slumping by 2.2 percent.

Biotechnology, brokerage and retail stocks also showed notable moves to the downside, while significant strength emerged among gold, telecom and utilities stocks.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower during trading on Tuesday. Japan's Nikkei 225 Index slid by 0.9 percent, while China's Shanghai Composite Index plunged by 2.4 percent.

The major European markets also moved to the downside on the day. While the U.K.'s FTSE 100 Index fell by 0.5 percent, the French CAC 40 Index and the German DAX Index tumbled by 1.7 percent and 1.8 percent, respectively.

In the bond market, treasuries moved notably higher, more than offsetting the pullback seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slumped 9.9 basis points to 2.760 percent.

Looking Ahead

The minutes of the latest Fed meeting are likely to be in the spotlight on Wednesday, while traders are also likely to keep an eye on a report on durable goods orders.