Snap shocks US markets as Wall Street closes in the red

Dusseldorf A record snap at Snap shocked investors on US stock markets on Tuesday. Snap shares plunged more than 42 percent, their sharpest drop ever. The Nasdaq index closed 2.3 percent lower at 11,264 points. The Dow Jones index closed little changed at 31,928 points after trading up to 1.5 percent lower. The broader S&P 500 ended trading down 0.8 percent.

The US group is dependent on advertising revenue. In times of economic uncertainty – like now – customers often become more cautious. The forecast reduction is therefore an indication of the deteriorating economy and the advertising business, wrote analyst Brent Thill from the investment bank Jefferies in an analysis.

Snap’s plunge spread to other ad-dependent tech stocks right after it opened in New York. The short message service Twitter (minus 5.5 percent), the photo platform Pinterest (minus 23.6 percent), the Google mother Alphabet (minus 5.1 percent) and the Facebook mother Meta (minus 7.6 percent) suffered according to calculations by the Financial service Bloomberg a total of more than $ 165 billion in market value.

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“Snap’s profit warning published yesterday after the market closed is another psychological damper for the stock market, which at the moment wants and needs to use every straw for a recovery,” commented analyst Joachim Stanzl from broker CMC Market on the development. “With worries of a plummeting advertising business, brief hopes that battered US tech stocks may have bottomed are fading.”

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On Monday, the leading index S&P 500 ended trading on the New York Stock Exchange with a plus of almost two percent. This had fueled hope in the market that after a seven-week streak of losses for investors, the worst was over.

However, three developments are currently exacerbating investors’ concerns about the economy, according to BlackRock’s investment experts. “The even harsher rhetoric from the US Federal Reserve, reports of clouded earnings prospects at major US retailers and weak economic indicators from China.” In the run-up to the publication of the Fed minutes on Wednesday, fluctuations on the stock exchanges are likely to remain high, the analysts said by ActivTrades. “More and more investors and analysts are questioning the Federal Reserve’s current aggressive stance and are awaiting further details.”

Trader Dennis Dick of brokerage Bright Trading said it must be clear that the rate hikes are counteracting high inflation without triggering a recession. “Until then, the market motto is ‘sell before ask,'” said trader Dennis Dick of brokerage Bright Trading.

Individual values ​​in focus:

Petco: Sales and earnings for the last quarter were better than expected. The pet products retailer’s stock rose 3.6 percent.

Abercrombie & Fitch: Abercrombie & Fitch shares tumble 40 percent at times after the clothing retailer lowered its full-year sales outlook. At the end of trading, the stock was down 28.6 percent.

Island: The medical device maker is in talks to be acquired by Dexcom, a maker of glucose monitoring systems, according to Bloomberg. Insulet’s stock gains 7.4 percent, Dexcom falls 11 percent.

Nautilus: The shares of the fitness equipment provider slip by around 19 percent. For the current quarter and the 2022/2023 financial year, Nautilus warned of results below market expectations. The industry environment remains difficult, commented analyst Mark Smith from the investment bank Lake Street. The trade is sitting on high inventories that were built up during the pandemic. Nautilus rival Peloton’s titles are down more than six percent.

Commodity Values: A slide in copper prices dragged stocks in the sector lower. Shares in Freeport-McMoRan, the world’s largest publicly traded copper producer, fell 2.9 percent. Southern Copper and Hudbay Minerals slipped as much as 2.6 percent. Concerns about an economic downturn pushed the price of the industrial metal down 1.8 percent to $9,379 a ton.

With material from Reuters.

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