Stocks give up gains as jitters return

Global stocks fell on Tuesday, returning some of the gains made the day before. This marked a return to the bearish drift in markets over the past few weeks as investors assessed mixed economic reports and corporate earnings.

Monday’s rally was the best start to the week since January, Deutsche Bank’s Jim Reid noted, “so much so that there is hope that the S&P’s seven-week losing streak may be over.” . But then, “just when you thought it was safe to get out from behind the couch,” he wrote, stocks were about to plummet.

  • The S&P 500 was down 2.2% mid-morning, while the tech-heavy Nasdaq fell 3.3%. The yield on the 10-year Treasury note, a key benchmark for borrowing costs, fell slightly, to just over 2.7%, as demand increased for safer assets. (Yields, or bond yields, fall when bond prices rise.)

  • Snap, the maker of messaging app Snapchat, said on Monday it would miss quarterly sales and profit targets, citing inflation, interest rates, supply chain shortages and more . Snap shares were down 40% mid-morning, with other ad-based tech platforms like Alphabet and Meta also taking more than 5%.

  • Abercrombie & Fitch fell more than 28% mid-morning after the clothing company reported a $14.8 million loss in the three months to April amid shipping and product costs higher. The company also cut 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% and 9%.

  • “The market and investors have these knee-jerk reactions because there’s so much uncertainty about what the future of growth looks like for the economy and for businesses,” said Lindsey Bell, chief strategist money and markets at Ally Invest. “You have retailers citing inflation as the reason for their weaker results, so there’s a question mark over consumer health.”

  • Electronics retailer Best Buy on Tuesday reported earnings that beat analysts’ expectations, initially pushing its shares lower ahead of a slight gain. Although the company’s sales fell in its latest quarter, the scale of the drop indicated that shoppers may not be as unnerved by inflation as some had feared after Walmart’s falling results. and Target last week.

  • In Europe, the Stoxx 600 index fell 1.1%, after company surveys showed that major economies such as France and Germany are still growing, albeit at a slower pace than these last months. In Japan, a similar survey showed deteriorating conditions for manufacturers, with a sharp increase in delivery times linked to shortages and pandemic lockdowns in China. Japan’s Nikkei 225 fell 0.9%, China’s CSI 300 fell 2.3% and Hong Kong’s Hang Seng lost 1.8%.

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