Stock futures indicate Wall Street sell-off will resume after Monday’s brief rally

Stock futures fell early Tuesday morning as markets struggled to sustain a comeback rally after weeks of losses.

Futures on the Dow Jones Industrial Average fell 202 points, or 0.6%. S&P 500 futures were down 1% and Nasdaq 100 futures were down 1.7%.

Snap shares plunged more than 31% after the company said it was bracing to miss its earnings and revenue targets in the current quarter and warned of a hiring slowdown. Shares of Meta Platforms followed Snap lower, falling 7% in the premarket, while Pinterest lost 14%.

“Stocks are being hit hard this morning and the main culprit is Monday night’s Snap warning,” wrote Vital Knowledge’s Adam Crisafulli. “Some are a little incredulous that a relatively small and perpetually unprofitable ephemeral social media company can take down the entire tape, but given how sensitive this tape is, SNAP could be above its weight.”

“Tech still dominates the market, both numerically (it remains the largest weighting) and psychologically, and despite aggressive liquidation over the past few months, people still own a lot of it,” he added.

Shares of major tech companies that depended on ad spend followed Snap lower. Alphabet slipped 4%. Amazon was down 2% and Apple and Netflix were down more than 1% each.

“We expect all online ad platforms to feel some impact from a significant consumer pullback,” Morgan Stanley analysts wrote after the Snap warning. “Advertising is cyclical.”

Meanwhile, Zoom Video shares rose 6% after the company issued strong guidance for the second quarter.

Retail gains continue this week, and investors are curious to see how high inflation is impacting consumer demand, and whether last week’s disappointments from the major retail chains were company-specific or industry-wide.

On Tuesday, shares of apparel maker Abercrombie & Fitch fell 10% premarket after reporting freight and product costs weighed on sales for its fiscal first quarter. Best Buy shares initially skyrocketed after the company beat sales expectations, but then reversed and last traded 2% lower. Retailers were among the top winners in the S&P 500 on Monday.

The moves came a day after the market recovered from last week’s steep sell-off, with the Dow hitting its first eight-week losing streak since 1923, and the S&P 500 briefly falling into bear market territory on an intraday basis.

Shares rose during Monday’s regular trading session as the Dow rose 618 points, or nearly 2%, after a week of sharp losses. The S&P 500 rose 1.9% and the Nasdaq Composite gained 1.6%.

The moves made investors wonder if the rally could hold up or if it was another small relief rally amid the relentless sell-off that hasn’t bottomed yet.

“This kind of environment where you have the whip and ups and downs that are so big is a trading environment where on any given day it can feel 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.”

Investors look forward to new home sales and a speech by Fed Chair Jerome Powell at the National Center for American Indian Enterprise Development summit on Tuesday. Nordstrom and Ralph Lauren are also slated to report earnings.

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