S&P 500 and Nasdaq slip as weak economic data and bleak outlook stoke recession fears

  • Snap Inc collapses, profit fears hit rival social networks
  • Abercrombie & Fitch slumps after downgrading revenue outlook
  • Indices: Dow up 0.15%, S&P down 0.81%, Nasdaq down 2.35%

NEW YORK, May 24 (Reuters) – The S&P 500 and Nasdaq ended in the red on Tuesday on fears that aggressive measures to curb inflation, which has been high for decades, could tip the U.S. economy into recession. dampened investors’ appetite for risk.

All three major U.S. stock indices pared losses in afternoon trade, with the blue-chip Dow Jones turning positive. Even so, the S&P 500 ended just 2.2 percentage points higher, confirming that it has been in a bear market since hitting an all-time high on Jan. 3.

“As we step back and recognize the catalysts in the primary market, it’s really about the pivot of the Fed and the shift in interest rates, which has influenced prices in capital markets,” Bill said. Northey, chief investment officer at US Bank Wealth Management in Helena. , Montana.

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“Over the past two weeks, we have seen some degree of macroeconomic deterioration beginning to show up in corporate earnings and economic releases.”

Much of the selloff was prompted by a profit warning from Snap Inc, which sent the company’s shares tumbling 43.1%, sparking contagion across the social media segment.

Meta Platforms Inc (FB.O), Alphabet Inc (GOOGL.O), Twitter Inc and Pinterest Inc fell between 5% and 24%, and the broader S&P 500 communication services sector (.SPLRCL) fell 3 .7%.

Global supply chain disruptions have been exacerbated by Russia’s war with Ukraine and restrictive measures in China to control its latest COVID-19 outbreak, sending inflation to decades-long highs.

The U.S. Federal Reserve has pledged to aggressively tackle persistent price growth by raising the cost of borrowing, and minutes from its latest monetary policy meeting, due Wednesday, will be scrutinized by market participants. looking for clues as to the speed and extent of these actions.

Investors are currently expecting a series of 50 basis point rate hikes over the next few months, fueling fears that the central bank could push the economy into recession, a scenario that is increasingly embedded in analysts’ projections.

“Tomorrow, we look to the FOMC minutes for any signs that the approach to monetary policy may be more hawkish or dovish than announced at the last meeting,” said Northey of US Bank Wealth Management.

Data released on Tuesday painted a picture of an economic slowdown, with new home sales falling and business activity decelerating.

Fed Chairman Jerome Powell’s counterpart in Frankfurt, European Central Bank President Christine Lagarde said she expects the ECB’s deposit rate to be raised by at least 50 basis points by the end of September, find out more

The Dow Jones Industrial Average (.DJI) rose 48.38 points, or 0.15%, to 31,928.62; the S&P 500 (.SPX) lost 32.27 points, or 0.81%, to 3,941.48; and the Nasdaq Composite (.IXIC) fell 270.83 points, or 2.35%, to 11,264.45.

Six of the 11 major sectors of the S&P 500 ended the session in negative territory, with communication services and consumer discretionary (.SPLRCD) suffering the largest percentage losses.

Clothing retailer Abercrombie & Fitch Co fell 28.6% after posting a surprise quarterly loss and slashing its outlook for full-year sales and margins. Read more

Work-from-home darling Zoom Video Communications Inc (ZM.O) jumped 5.6% after its full-year profit surged on strong business demand. Read more

Falling issues outnumbered rising ones on the NYSE by a ratio of 1.28 to 1; on the Nasdaq, a ratio of 2.37 to 1 favored the decliners.

The S&P 500 posted three new 52-week highs and 40 new lows; the Nasdaq Composite recorded 17 new highs and 443 new lows.

Volume on U.S. exchanges was 11.78 billion shares, compared to an average of 13.33 billion over the past 20 trading days.

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Reporting by Stephen Culp; additional reporting by Devik Jain and Anisha Sircar in Bengaluru; edited by Jonathan Oatis

Our standards: The Thomson Reuters Trust Principles.

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