Wall Street plummets again, disappointed in corporate results

As of 4:15 p.m., the Nasdaq is down 3.22%, the Dow Jones is down 0.70% and the S&P 500 is down 1.71%.

The New York Stock Exchange opened lower on Tuesday, bolstered by poor corporate results impacted by inflation and rising interest rates heralding a slowing economy.

At around 14:15 GMT, the Dow Jones was down 0.70%, the Nasdaq index, with a strong tech tone, was down 3.22% and the broader S&P 500 index was down 1.71%.

“The good feelings that made Monday’s recovery possible were overwhelmed by Snap’s warning,” Briefing.com’s Patrick O’Hare said in a note.

The parent company of the social network Snapchat indicated Monday after the IPO that its revenue and results for the second quarter are expected to come in below the lower end of the range originally announced.

In early trade, the platform plunged 40.12% to $13.45.

From Meta (-9.33%), to Alphabet (-7.39%), to Pinterest (-25.34%) and Pinterest (-25.34%), the entire sector became in the wake of the Santa Monica (California) group of advertising-dependent social networks and sites swept away Twitter (-3.35%).

“It is a warning sign that companies themselves will cut their advertising budgets because they think they will make less money in the near future,” responded Gregori Volokhine of Meeschaert Financial Services.

As for the distribution sector, a new spate of figures confirmed that it has been suffering from rising prices, which is shrinking its margins but is also beginning to hamper consumption.

For example, ready-to-wear brand Abercrombie & Fitch (-26.90% to $19.54) was despondent after releasing a quarterly loss, while analysts were expecting a small profit. The group has also lowered its margin targets to reflect the increase in sourcing and transportation costs.

“It is very difficult to overlook the fact that the business cycle is deteriorating rather than improving,” Gregori Volokhine stressed.

Electronics chain Best Buy (+3.13% to $74.86) also reported sales and profits below the prior-year period.

The retailer has lowered its targets for its 2023 fiscal year, which ends at the end of next January.

Ralph Lauren was swept up by this recent seller (-2.36% to $88.80) despite better-than-expected results, thanks in particular to growth in Europe and the dynamism of online sales in North America and Asia.

“Nothing escapes the fact that headwinds caused by inflation are affecting absolutely all sectors,” Gregory Volokhine stressed. “Unfortunately, the interest rate hike only benefits one sector, that is the banks. Everything else in the economy suffers.”

On Monday, JPMorgan Chase (+0.58% to $125.32) said it was more bullish on its 2022 and 2023 results.

In this pessimistic climate, defensive stocks, ie stocks that are traditionally less dependent on the economy, were in demand. Coca-Cola (+0.83%), Johnson & Johnson (+0.77%), Merck (0.55%) or Procter & Gamble (+0.68%) have all made progress.

Also among the few companies that did well was Zoom (+0.91% to $90.14), which reported slower growth but raised its earnings target.

Sentiment was further dampened by the 16.6% fall in new home sales in April in the United States, surprising analysts who had expected a modest 1.7% decline.

After months of mimicking the movement of stocks, an unusual phenomenon, the bond market once again played its counterpoint role and was favored by investors.

The US 10-year Treasury yield fell from 2.85% to 2.75% as bond prices, which moved in the opposite direction to their interest rates, rose.

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