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NEW YORK (dpa-AFX) – Against the background of bad news from the social media industry, the US stock exchanges gave up some of their gains from the previous day on Tuesday. While the leading index Dow Jones Industrial (Dow Jones 30 Industrial) still managed to jump into the profit zone in the last few minutes of trading, the technology-heavy NASDAQ 100 dropped heavily. The forecast from Snap, which pulled down large parts of the industry, spread bad mood here. The news from the Snapchat group fueled renewed concerns about risks to economic growth.
The Dow looked like a loss for a long time before turning positive shortly before the close. In the end, the leading index recorded a gain of 0.15 percent at 31,928.62 points. The previous day it had increased by almost 2 percent. The market-wide S&P 500 had to accept losses, which fell by 0.81 percent to 3941.48 points. The tech-heavy NASDAQ 100 slipped 2.20 percent to 11,769.84 points.
“These wild day-to-day swings have become the norm as investors try to bottom out in the markets only to be hit again by one or two negative headlines,” writes market analyst Craig Erlam at The Broker Oanda. Lousy growth forecasts in China and Snap’s profit and sales warning seemed to be the reason for the price slide on Tuesday.
Indeed, among the individual values, the makers of the Snapchat app stood out. Snap announced last night that it would miss second-quarter earnings and revenue guidance given deteriorating macroeconomic trends. That sent the stock down 43 percent — the biggest one-day percentage loss in the paper’s history. The news had already put pressure on technology stocks in Asia and Europe in the morning.
“All things considered, we believe the headwinds for Snap are coming from many directions,” writes JPMorgan analyst Doug Anmuth. He assumes that the group’s cautious tenor also harbors downside risks for other stocks from the online industry.
In fact, Snap pulled other stocks from the social media and online industries with it in the US stock market. The Facebook mother Meta (Meta Platforms (ex Facebook)) fell by almost eight percent, while the group of the Google mother Alphabet (Alphabet A (ex Google)) lost around five percent. Shares in the photo platform Pinterest collapsed by almost a quarter. Shares of e-commerce platforms were also hit hard: Pinduoduo fell by 8.6 percent and MercadoLibre by 9.6 percent.
It was also bad for Abercrombie & Fitch (AbercrombieFitch). The fashion retailer’s shares tumbled nearly 29 percent after it reported an unexpected first-quarter loss.
On the other hand, one of the few winners was the video conferencing service Zoom (Zoom Video Communications), whose shares rose by 5.6 percent. The group had done better than expected in the past quarter and surprised its investors with an increased sales and profit forecast. Zoom has met the previously low expectations, wrote analyst Peter Levine from the analysis house Evercore ISI. However, the expert still sees risks and no short-term price driver even after the share price slide in the past twelve months.
With the prospect of an imminent interest rate hike by the European Central Bank (ECB), the euro rose above 1.07 US dollars on Tuesday for the first time since the end of April. After the US market closed, the common currency cost $1.0733. The ECB had set the reference rate at 1.0720 (Monday: 1.0659) dollars, the dollar has cost 0.9328 (0.9382) euros.
On the bond market, the futures contract for ten-year Treasuries (T-Note Future) rose by 0.64 percent to 120.36 points. In return, the yield on ten-year government bonds fell to 2.76 percent./jcf/la/ngu
— By Jan Christoph Freybott, dpa-AFX —