Tech rout set to drag Wall Street lower, as Snap warning drags Facebook, Google, Twitter lower in premarket

• Marketwatch: Tech rout set to drag Wall Street lower, as Snap warning drags Facebook, Google, Twitter lower in premarket

• Wall Street Journal (Paywall free): Stock Futures Drop in Volatile Trading, Technology stocks were particularly hard hit before the opening bell after Snap issued a profit warning

Marketwatch:

What’s driving the markets?

Monday’s climb for stocks followed the Dow industrials’ longest stretch of weekly losses since 1932 and a temporary dip by the S&P 500 index into bear-market territory last week.

But the Nasdaq Composite has led major indexes with year-to-date losses, down 26% and off 28% from its 52-week high of 16,057.44 reached Nov. 19, 2021. A drop of 20% or more from a recent high is one technical definition of a bear market.

SNAP shares slumped 30% in premarket trading Tuesday after the social-media company warned late Monday that it would likely miss quarterly estimates as the economy has “deteriorated further and faster than anticipated.”

“That’s stopped all the ‘worst is over’ pundits in their tracks. It highlights how fleeting swings in sentiment are now and that investors are running at the first sign of trouble,” said Jeffrey Halley, senior market analyst at OANDA, in a note to clients.

Other tech companies that rely on advertising as a revenue stream were also getting battered in premarket, with Facebook parent Meta Platforms Inc. FB, +1.39% down nearly 6%, Pinterest Inc. PINS, -1.40% tumbling 11%, Google parent Alphabet GOOGL, +2.37% off 3.8% and Twitter Inc. TWTR, -1.12% off around 4%.

…

”The market continues to turn itself inside out and back to front as it tries to decide if it has priced all of the impending rate hikes, soft landing or recession, inflation or stagflation, China, Ukraine, US summer driving season, supply chains, the list goes on. The result is a day-to-day chop-fest, and it seems clear that volatility is the winner,” said Halley.

Investors may be looking for more policy clues from Fed Chairman Jerome Powell, who is due to give opening remarks at a Native American development conference at 12:20 p.m. Eastern Time. New home sales for April are due at 10 a.m. Eastern.

WSJ:

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. That has been among the catalysts for the U.S. stock market’s brutal year, which has sent the S&P 500 falling 17% from its January high, based on Monday’s close.

There have been glimmers of optimism, however, such as on Monday, when JPMorgan Chase 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 rollercoaster 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 premarket technology selloff, there were bright spots in the market. Zoom Video Communications advanced 5.8% before the opening bell after the videoconferencing services company raised its profit outlook. Elsewhere in the market, Best Buy jumped 8.5% after reporting revenue that topped analyst expectations.

Note: Marketwatch often changes the title of premarket articles after opening bell. The title posted is the premarket title.

Note: This post is not advocating for a bull or bear position. IMO investors do best if they understand both sides of a trade.