Stocks Give up Gains as Jitters Return

May 24, 2022
Business

Global stocks fell on Tuesday, giving back some of the gains made the day before. It marked a return to the downward drift in markets in recent weeks, as investors weighed mixed economic reports and company earnings.

Monday’s rally was the strongest start to a week since January, Jim Reid of Deutsche Bank noted, “so much so that there’s hope that the successive weekly losing SP streak of seven might be ended.” But then, “just when you thought it was safe to emerge from behind the sofa,” he wrote, stocks were set to fall.

The SP 500 was down 2.2 percent in midmorning trading, while the tech-heavy Nasdaq fell 3.3 percent. The yield on the 10-year Treasury note, a key benchmark for borrowing costs, fell slightly, to just over 2.7 percent, as demand rose for safer assets. (Yields, or the return on bonds, fall when prices for bonds rise.)

Snap, the maker of the messaging app Snapchat, said on Monday that it would miss its quarterly goals for sales and profit, citing inflation, interest rates, supply chain shortages and more. Snap’s shares were down 40 percent in midmorning trading, with other tech platforms that rely on advertising, like Alphabet and Meta, also taking hits of more than 5 percent.
Abercrombie Fitch fell more than 28 percent in midmorning trading after the apparel company reported a loss of $14.8 million in the three months ending in April amid higher costs for transportation and products. The company also slashed its sales forecast for the year from its previous outlook. Other retailers fell on the news, with Urban Outfitters and American Eagle Outfitters down 5 percent and 9 percent.

“The market and investors are having these kneejerk reactions because there’s so much uncertainty about what the future of growth looks like for the economy and for corporations,” said Lindsey Bell, the chief money and markets strategist at Ally Invest. “You got retailers pointing to inflation as the reason for their weaker earnings results, so there’s a question mark about the health of the consumer.”

The electronics retailer Best Buy reported results on Tuesday that beat analyst expectations, initially pushing its shares lower before a slight gain. Although the company’s sales fell in its most recent quarter, the scale of the decline signaled that shoppers may not be as unnerved by inflation as some had feared after downbeat earnings from Walmart and Target last week.
In Europe, the Stoxx 600 index fell 1.1 percent, after business surveys showed that large economies like France and Germany continue to expand, albeit at a slower pace than in recent months. In Japan, a similar survey showed deteriorating conditions for manufacturers, with a sharp increase in delivery times related to shortages and pandemic lockdowns in China. Japan’s Nikkei 225 index fell 0.9 percent, China’s CSI 300 dropped 2.3 percent and Hong Kong’s Hang Seng lost 1.8 percent.

Article source: https://www.nytimes.com/2022/05/24/business/stock-market-today.html