Stocks give up gains as nerves return

Global stocks fell on Tuesday, giving up some of Monday’s gains and returning to the downward trend of recent weeks as investors weighed mixed economic reports and corporate earnings.

Monday’s rally had been the strongest start to a week since January, said Deutsche Bank’s Jim Reid, “so much so that there is hope that the S&P’s successive weekly losing streak of seven could end.” But then, “just when you thought it was safe to come out from behind the couch,” he wrote, stocks were about to drop.

  • The S&P 500 fell 0.8 percent, taking its drop from its Jan. 3 high to 17.8 percent. The Nasdaq Composite, which is heavily weighted toward technology stocks that have led share price declines for months, fell 2.3 percent.

  • The yield on the 10-year Treasury note, a key benchmark for borrowing costs, fell 10 basis points, or about 0.1 percentage point, to about 2.76 percent, as it rose. the demand for safer assets. (Yields, or bond yields, fall when bond prices rise.)

  • Snap, the maker of the Snapchat messaging app, said on Monday it would miss its quarterly sales and profit targets, citing inflation, interest rates, supply chain shortages and more. Shares of Snap fell 43 percent on Tuesday, with other ad-reliant tech platforms like Alphabet and Meta also taking a hit.

  • Abercrombie & Fitch fell 28.6 percent after the clothing company reported a $14.8 million loss in the three months ending April amid higher freight and product costs. The company also cut its sales forecast for the year from its previous forecast. Other retailers fell on the news, with Urban Outfitters and American Eagle Outfitters down 7.9 percent and 6.3 percent.

  • “The market and investors are having these knee-jerk reactions because there is a lot of uncertainty about what the future of growth looks like for the economy and for corporations,” said Lindsey Bell, chief money and markets strategist at Ally Invest. “Retailers point to inflation as the reason for their weaker earnings results, so there is a question mark over consumer health.”

  • Electronics retailer Best Buy reported results on Tuesday that beat analysts’ expectations, lifting its shares 1.2 percent. Although the company’s sales fell in its most recent quarter, the scale of the decline indicated shoppers may not be as nervous about inflation as some feared after negative earnings at Walmart and Target last week.

  • In Europe, the Stoxx 600 index fell 1.1 percent, after business surveys showed that large economies such as 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 rise in delivery times linked to shortages and pandemic lockdowns in China. Japan’s Nikkei 225 fell 0.9 percent, China’s CSI 300 fell 2.3 percent and Hong Kong’s Hang Seng lost 1.8 percent.

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