Around 4:15 p.m., the Nasdaq posted a drop of 3.22%, the Dow Jones a drop of 0.70% and the S&P 500 a decline of 1.71%.
The New York Stock Exchange opened in the red on Tuesday, brought down to earth by poor corporate results, affected by inflation and rising rates, which herald a slowing economy.
Around 2:15 p.m. GMT, the Dow Jones lost 0.70%, the Nasdaq index, with a strong technological tone, fell by 3.22%, and the broader S&P 500 index lost 1.71%.
“The good feelings which had allowed the rebound of Monday were showered by the warning of Snap”, explained, in a note, Patrick O’Hare, of Briefing.com.
The parent company of the social network Snapchat indicated, Monday after the stock market, that its turnover and its results for the second quarter would probably be lower than the bottom of the range initially announced.
In early trade, the platform plunged 40.12% to $13.45.
In the wake of the Santa Monica (California) group, the entire sector of social networks and sites dependent on was swept away, from Meta (-9.33%) to Alphabet (-7.39%), via Pinterest (-25.34%) and Twitter (-3.35%).
“It is a warning signal that the companies themselves will lower their budgets because they think they will earn less money in the near future,” reacted Gregori Volokhine, of Meeschaert Financial Services.
As for the distribution sector, a new volley of figures confirmed that it was suffering from soaring prices, which is shrinking its margins but also beginning to handicap consumption.
The ready-to-wear brand Abercrombie & Fitch (-26.90% to 19.54 dollars) was, for example, desperate after the publication of a quarterly loss, while analysts expected a small profit. The group has also lowered its margin targets to take into account the rise in supply and transport costs.
“It’s very difficult not to see that the economic cycle is rather deteriorating than improving,” insisted Gregori Volokhine.
The Best Buy electronics store chain (+3.13% to 74.86 dollars) also reported a turnover and a profit lower than that of the same period last year.
The retailer has lowered its targets for its 2023 fiscal year, which will end at the end of next January.
Ralph Lauren was carried away by this current seller (-2.36% to 88.80 dollars) despite results above expectations, thanks in particular to growth in Europe and the dynamism of online sales in North America and Asia.
“Nothing escapes the fact that the headwind which has been brought about by inflation affects absolutely all sectors”, underlined Gregori Volokhine. “The rise in rates only benefits one sector, unfortunately, it is the banks. Everything else in the economy is suffering.”
On Monday, JPMorgan Chase (+0.58% to 125.32 dollars) said it was more optimistic about its 2022 and 2023 results.
In this pessimistic climate, defensive stocks, ie stocks traditionally less sensitive to economic cycles, were sought after. Coca-Cola (+0.83%), Johnson & Johnson (+0.77%), Merck (0.55%) or Procter & Gamble (+0.68%) all advanced.
Among the few companies to do well was also Zoom (+0.91% to 90.14 dollars), which while it reported slower growth raised its profit target.
The mood was further clouded by the 16.6% drop in new home sales in April in the United States, taking analysts by surprise, who had expected a slight decline of 1.7%.
After months of mimicking the movement of equities, an unusual phenomenon, the bond market was once again playing its counterpoint role and was favored by investors.
The yield on 10-year US government bonds eased to 2.75% from 2.85%, while bond prices, which move in the opposite direction to their rates, climbed.