Stagnant tech stocks drive Wall Street down.


Wall Street shares gained more support on Tuesday as fears grew that high inflation could dampen corporate earnings.

The S&P 500 fell 0.8% and the Nasdaq Composite fell 2.3%. The Dow Jones Industrial Average rose 0.2% mainly thanks to big gains at McDonald’s and UnitedHealth.

Big tech and telecommunications companies helped press the broader market, but some sales eased in the late afternoon.

all huge profit warning Snapchat’s parent company stunned investors by dumping stocks of major social media companies. Snap plunged 43.1%, the biggest one-day drop in history, and Facebook’s parent company, Meta, also fell 7.6%. Google’s parent company, Alphabet, fell 5.1%.

High-value technology and telecom stocks tend to have a big impact on the market. The sector has accounted for much of the market’s recent volatility, with major indices dropping sharply since early April as investors fear the impact of rising inflation on businesses and consumers.

The decline dampened the broad rally the day before, and is the latest example of just how volatile trading has been during the market crash this year.

“Given how much uncertainty exists, people are still struggling to find one or two catalysts that give them enough confidence to assume risky assets,” said Sameer Samana, senior global markets strategist at the Wells Fargo Investment Institute.

The S&P 500 fell 32.27 points to close at 3,941.48. The Dow closed at 31,928.62, up 48.38 points, and the Nasdaq at 11,264.45, down 270.83 points.

Small-cap stocks also fell. The Russell 2000 index fell 27.94 points, or 1.6%, to close at 1,764.83.

A pile of concerns weighing on the market is the benchmark S&P 500 before the bear market, this is when the index is down 20% from its most recent high. That’s an 18% drop from the previous record set earlier this year.

Inflation is straining various industries in the form of higher raw material costs and a more expensive labor force. Many companies have been raising prices for things like food and clothing to offset the impact of higher costs, but the pressure is growing. Major retailers, including Target and Walmart, said higher costs are straining their operations. They also raised concerns that consumers are easing their spending on a variety of goods.

“When you think about consumer spending, wages are great, but inflation is bigger,” said Barry Bannister, chief equity strategist at Stiefel. “Consumers are under pressure and this is affecting all retail businesses.”

Consumers were already under pressure from the disconnect between supply and demand. Russia invades Ukraine It has triggered another surge in energy prices. U.S. crude oil has risen about 50% this year, which has caused gasoline prices to hit all-time highs and cut spending on pumps for many. Supply chain problems are exacerbated by: China’s recent lockdown In several major cities as we deal with the growing number of COVID-19 cases.

Wall Street is also worried about the Fed’s plans to fight inflation. The central bank is aggressively raising rates from historical lows, but investors are concerned that the rate hike may be too overdone or move too quickly. This could slow business and potentially lead to a recession. Fed Chairman Jerome H. Powell acknowledged that high inflation abroad and weakening the economy could hinder central banks’ efforts to cool the economy and contain inflation without falling into a recession.

Investors will learn more about the Fed’s decision-making process on Wednesday as it releases minutes from its latest policy meeting.

“The market will be hard to go up until oil collapses and the Fed pauses,” Bannister said.

Retailers and companies that depend on direct consumer spending fell sharply on Tuesday. Amazon fell 3.2% and Target fell 2.6%.

Bond yields have fallen. The 10-year Treasury yield fell to 2.76% from 2.86% late on Monday.

Falling bond yields have burdened banks that rely on higher yields and charge higher interest rates on their loans. Wells Fargo fell 1.2%.

Homebuilders plummeted after a government report that sales of newly built homes fell far short of economists’ forecasts. KB Home fell 2.7%.

Cruise ships and other travel-related companies suffered the most. Carnival fell 10.3% and Norwegian Cruise Lines fell 12%.

Household goods companies and utilities, which are considered less risky than other sectors, have benefited. Campbell Soup is up 3.5% and Duke Energy is up 2%.

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