Stocks fell on Tuesday as investors returned to dumping stocks on fears of a recession following a brief sell-off reprieve.
The Dow Jones Industrial Average fell 201 points, or 0.6%. The S&P 500 lost 1.4%, and the tech-heavy Nasdaq Composite dropped 2.5%.
The selling was broad on Tuesday with 457 of the S&P 500 members declining. The 10-year Treasury yield made a sudden move lower as investor fearing a recession crowded into bonds sending their prices higher. The 10-year Treasury yield slipped at the way back to 2.73% on Tuesday after climbing as high 3.21% earlier this year.
Shares of tech companies led the losses on fears of digital advertising slowing following a warning from social media company Snap. Its shares plummeted more than 40% after the company said it’s bracing to miss earnings and revenue targets in the current quarter and warned of a hiring slowdown. Meta Platforms followed Snap lower, falling 8.2%. Google-parent Alphabet dropped 5.6% to a new 52-week low.
“The main culprit is the Snap warning from Monday evening,” wrote Adam Crisafulli of Vital Knowledge, in a note. “Some are a bit incredulous that a relatively small and perennially unprofitable ephemeral social media firm can take down the whole tape, but given how sensitive this tape is, SNAP is able to punch above its weight.”
“Tech still dominates the market, both numerically (it remains the biggest weighting) and psychologically, and despite aggressive liquidation in the last couple of months, people still own a lot of it,” he added.
Amazon fell to a new 52-week low and was last down 2.5%. Apple shed 2%.
“We expect all online ad platforms to feel some impact of a significant consumer pullback,” wrote Morgan Stanley analysts after the Snap warning. “Advertising is cyclical.”
The negative reversal Tuesday came after stocks rallied Monday as the Dow jumped 618 points, or nearly 2%. The S&P 500 rose 1.9%, and the Nasdaq Composite gained 1.6%. The brief bounce came as the market is mired in a relentless sell-off with the Dow down for 8 straight weeks and the S&P 500 briefly hitting bear market territory on Friday.
The S&P 500 sits 18.5% from its record after falling more than 20% from its high at one point on Friday. The Dow’s losing streak is its longest since 1923.
Along with tech stocks, the sell-off has been driven by losses in the retail sector following poor earnings and outlooks from Target and Walmart last week. Investors got more poor news from that industry Tuesday with Abercrombie & Fitch dropping 30% after reporting that freight and product costs weighed on sales for the fiscal first quarter.
Best Buy shares initially popped after the company reported a mixed quarter, and were last 1% higher. Retailers were among the top gainers in the S&P 500 during Monday’s relief rally. Nordstrom and Urban Outfitters will report earnings after the bell.
“This kind of environment where you’ve got the whipsaw and ups and downs that are so big is a trading environment where it can feel on any given day like you were wrong yesterday and that is ripe for mistakes,” Sofi’s head of investment strategy Liz Young told CNBC’s “Closing Bell: Overtime.”