The stock market gave back all of its gains from the prior day's rally, although indexes came off session lows at midday. Social media stocks sold off after Snap warned that it will miss guidance.
The Nasdaq wiped out all of Monday's 1.6% gain as the composite plummeted 2.8%. It had been down as much as 3.8% today. The S&P 500 fell 1.7% and also surrendered all of Monday's rally.
The Dow Jones Industrial Average fell 0.8%. The small-cap Russell 2000 fell 2.4%. Volume rose on the Nasdaq and the NYSE compared with the same time on Monday.
Snap plunged 40% in its worst day ever, according to Dow Jones Market Data. The parent of Snapchat warned its second-quarter results will miss the company's targets. On April 21, Snap missed Q1 estimates and warned at that time its revenue was growing more slowly than expected.
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 31612.83 | -267.41 | -0.84 |
| S&P 500 | (0S&P5) | 3906.43 | -67.32 | -1.69 |
| Nasdaq | (0NDQC ) | 11209.25 | -326.03 | -2.83 |
| Russell 2000 | 173.90 | -4.31 | -2.42 | |
| IBD 50 | 30.04 | -0.52 | -1.70 | |
Last Update: 12:06 PM ET 5/24/2022 |
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"Since we issued guidance on April 21, 2022, the macroeconomic environment has deteriorated further and faster than anticipated," the company said in an SEC filing late Monday.
The biggest sector to tumble was the Communications Services Select Sector SPDR ETF, which includes social media stocks but others such as entertainment and telecom stocks. The ETF plunged more than 5%. It includes Facebook parent Meta Platforms, Alphabet, Walt Disney and Warner Bros. Discovery, which all fell between 5% and 11% in heavy volume.
Tesla fell nearly 6% to its lowest point since June 2021 amid CEO Elon Musk's efforts to acquire Twitter. Twitter shares dropped 3.8%.
Stock Market Hit By Weak Economic News
Snap's warning, combined with weak retail earnings and economic news sent indexes lower.
Sales of new single-family houses in April 2022 dropped 16.6% to a seasonally adjusted annual rate of 591,000, below the revised March 2022 estimate of 709,000, according to the U.S. Census Bureau.
It was the fourth consecutive month of declines. Meanwhile, 30-year fixed mortgage rates surpassed 5.0%, for the first time since the Great Recession in 2009.
"Rising mortgage rates and rising home prices have combined causing the market to level off at more balanced supply and demand conditions," said Kelly Mangold of RCLCO Real Estate Consulting.
IShares U.S. Home Construction ETF fell 3.3%. Building products supplier Builders FirstSource fell more than 6%.
Putting more fuel on the fire, the Composite Purchasing Managers' Index came in below economists' estimates, according to Econoday. The flash composite index for May was 53.8, down from 56.0 in April and below the consensus estimate of 55.5. The rate of growth was the slowest in four months, and the index is now below the long-run average of 54.8, S&P Global said.
The survey's manufacturing index of 57.5 also missed views of 58.9. The services index of 53.5 lagged estimates of 55.3.
But while mortgage rates rose, U.S. Treasury yields went down. The 10-year Treasury note dropped 13 basis points to 2.73%, its lowest yield in more than a month.
Snap Crash Raises Big Market Fear; Defense Giant Goes On Offense
Tech And Consumer Discretionary Stocks Fall
In addition to the communications sector, tech and consumer discretionary took the biggest hit.
But Zoom Video Communications rallied nearly 8% after reporting April-quarter profit fell from a year earlier but topped estimates. ZM stock initially surged but surrendered most of those gains as its profit margin outlook also came in above expectations.
"Zoom reported Q1 results above consensus, but reiterated revenue guidance due to currency and Russia-Ukraine headwind," Mizuho Securities analyst Siti Panigrahi said in a note to clients quoted in our Zoom earnings story. "The company materially raised 2023 EPS and operating margin guidance."
After last week's retail rout, Best Buy gave a mixed April-quarter report early today, but the stock rose 1.3%. The consumer electronics chain met profit estimates as sales rose more than expected. Still, the company's guidance was weak.
For the full fiscal year, the midpoint of Best Buy's forecast is for adjusted earnings of $8.70 a share on sales of $49.1 billion. Its previous forecast was earnings of $9 a share on sales of $50.1 billion. It now expects same-store sales to fall 3% to 6%, from an earlier expected decline of 1% to 4%.
Innovator IBD 50 ETF fell 2.5%. Boise Cascade fell more than 5% and below its 50-day moving average.
Follow Michael Molinski on Twitter @IMmolinski
