U.S. stock indexes moved lower and a selloff in technology stocks deepened, as growing investor concerns about the outlook for economic growth weighed on the market.
The S&P 500 fell 1.5% Tuesday morning, while the Dow Jones Industrial Average lost 0.5%. The tech-heavy Nasdaq Composite slid 2.8%.
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
soured investor sentiment again. Asian indexes broadly fell amid declines in technology stocks. European markets also traded lower.
Snap’s shares fell about 40% 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.
shed 9.8% and Google-parent
fell 6.3%.
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.
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.
On Tuesday, as big tech companies took a drubbing, stocks with more of a foothold in the physical economy sustained narrower losses or gains. The consumer-staples and packaged-foods sectors of the S&P 500 were the only two of the index’s 11 components in positive territory.
Tim Courtney, chief investment officer at Exencial Wealth Advisors, took that as a sign that inflation, and the Fed’s response, remained a bigger worry for many investors than the possibility of an economic downturn.
Wealth-management clients had been taking the stock market’s downturn in stride this year, but as bear-market levels have approached for the S&P 500, their fear has built, Mr. Courtney said.
“The last week, as we’ve approached that magical bear-market barrier, I think the concerns started rising,” he said.
Disappointing earnings and warnings across the corporate landscape have exacerbated the fears.
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 28%.
There have been glimmers of optimism, however. On Monday,
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 technology selloff, there were bright spots in the market.
was up 0.6% 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.
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 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.
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
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