Dow tumbles 700 points, Nasdaq slumps ahead of huge tech profits

US stocks traded sharply lower on Tuesday afternoon, failing to benefit from the previous session’s rebound, as investors scrutinized a batch of the company’s results and awaited earnings reports due after a bell from tech giants including Microsoft and parent Google Alphabet Inc.

How do stock indices work?
  • Dow Jones Industrial Average DJIA,
    -2.16%
    It decreased about 736 points, or 2.2%, to about 33,314 points.

  • S&P 500 SPX Index,
    -2.55%
    It fell about 110 points, or 2.6%, to 4,186 points.

  • Nasdaq Composite,
    -3.65%
    It fell 475 points, or 3.7 percent, to trade about 12,530 points.

Monday saw the biggest intraday reversal since February for the Dow, which rose 238 points, or 0.7%, erasing a nearly 500-point loss. The S&P 500 rose 0.6% and the Nasdaq Composite 1.3%.

Read also: US stocks ended Monday’s mania in the green – but an intraday bounce like this isn’t bullish

What is driving the markets?

Shares were lower Tuesday afternoon, with all three major benchmarks lower after Monday’s rally.

“Investors are not necessarily safe” in market strength, with “fragility” emerging since the start of the year, Ovin Devitt, chief investment officer at Moneta, said in a phone interview Tuesday. “There is a fear of slowing growth.”

CBOE VIX Volatility Index,
+ 18.87%
It jumped nearly 18% to nearly 32 on Tuesday afternoon, according to FactSet data. This compares to a 200-day moving average of about 21.

Discretionary consumer SP500.25,
-4.39%And
IT SP500.45,
-3.38%
and telecom services SP500.50,
-2.63%
The sectors that were hardest hit were the S&P 500 early Tuesday afternoon, according to FactSet data. Technology and Communications Services reported the strongest performance of the S&P 500 Index in Stock market rebound on Monday.

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“Now we have that payback today,” Devitt said. “The markets are trying to figure out the level.”

The S&P 500 index is trading near its lowest closing level this year at 4,170.70 on March 8, according to market data from Dow Jones. The Nasdaq was trading below its 2022 closing low of 12,581.22, hit March 14, according to FactSet data, at last check.

US stocks fell as investors entered the most active week in the US corporate earnings reporting season, absorbing the results of a number of heavyweights released before the opening bell. They are also eyeing results from tech giants Microsoft Corp. MSFT,
-3.44%
and Google’s parent company, Alphabet Inc. GOOG,
-2.75%
After the closing bell.

The tech giants are the “big movers in the market,” Paul Nolte, portfolio manager at Kingsview Investment Management, said by phone on Tuesday. Both the S&P 500 and the Nasdaq were heavily influenced by the technology.

It was formerly the high-flying Netflix NFLX,
– 5.07%
Shares have fallen more than 40% since last week’s announcement I lost 200,000 subscribers in the first quarter.

While about 80% of companies that have so far reported earnings for the quarter have beat earnings expectations, including General Electric, United Parcel Service Inc and PepsiCo, Inc., disappointing earnings expectations are weighing on stocks.

Read: The first major Wall Street bank to call for a recession now sees clear external risks that it could be ‘more severe’

In US economic data, Orders at US factories for durable goods rose 0.8% in March Business investment rebounded after the first decline in a year, indicating that the economy is still growing at a steady pace. The rise in durable goods orders is in line with the consensus forecast from a survey of economists by the Wall Street Journal.

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a Consumer confidence survey It fell in April to 107.3 from 107.6, but Americans indicated they were optimistic enough about the economy to continue buying expensive items such as news, cars and appliances.

The S&P CoreLogic Case-Shiller Home Price Index for 20 Cities It posted a 20.2% year-over-year increase in February, up from 18.9% in the previous month, but the US New home sales fell 8.6% to an annual rate of 763,000 in March, the government said on Tuesday.

Meanwhile, next week’s federal policy meeting weighs on investors, who expect the central bank to announce a significant rate hike, potentially as high as 50 basis points, in an effort to tame severe inflation, according to Nolte.

“The Fed is going to raise interest rates until something breaks, and that will be the economy,” he said. “Concerns may grow about the possibility of a recession.”

What companies are focused on?
  • Twitter Inc. TWTR,
    -3.68%
    Shares fell 3.3% on Tuesday to around $50 after its board of directors agreed on Monday to accept Tesla Chairman Elon Musk’s $54.20 offer to buy a stake in the social media platform.

  • 3M MMM Company,
    -2.86%
    Shares fell 2.9% after the stock and industrial equipment maker announced First quarter earnings better than expected.

  • Shares of PepsiCo Inc. PEP,
    + 0.13%
    It rose 0.1% after making profits and revenue from it Exceeded Wall Street expectations.

  • United Parcel Service Inc. UPS,
    -3.40%
    Shares fell 2.7 percent after the parcel delivery giant reported first-quarter earnings and revenue exceed expectations.

  • General Electric GE,
    -10.46%
    Shares fell 10.8% after the industry group reported revised first-quarter earnings and revenue that beat expectations, but missed out on free cash flow and provided somewhat pessimistic look.

  • Shares of JetBlue Airways Corp. JBLU,
    -11.10%
    It fell 10.6% after the air carrier reported a smaller-than-expected loss and revenue doubled to match expectations, but said it was planning to. Reduce capacity growth As well as to help restore operational reliability. United Airlines Holdings Inc. UAL,
    -4.83%
    Tuesday said it’s going The largest transatlantic expansion in its history With 30 new or resumed flights running from mid-April through early June. United Airlines shares fell 4.4 percent.

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How are the other assets?
  • The 10-year Treasury yield is TMUBMUSD10Y,
    2.751%
    It fell 5.2 basis points to 2.773%. Yield and debt prices move opposite each other.

  • ICE DXY US Dollar Index,
    + 0.60%And
    The currency gauge against a basket of six major competitors rose 0.6%.

  • Bitcoin BTCUSD,
    -4.71%
    It fell 4.9% to trade around $38,182.

  • Oil futures CL.1,
    + 3.61%
    It ended higher, with June WTI CLM22,
    + 3.61%
    Climbing 3.2% delivery to settles in $101.70 per barrel.

  • GC00 gold futures,
    + 0.30%
    closed higher, with gold for June delivery GCM22,
    + 0.30%
    rises 0.4% to settles in $1,904.10 an ounce.

  • In European stocks, Stoxx Europe 600 SXXP,
    -0.90%
    It closed 0.9% lower, while the FTSE 100 UKX Index closed in London,
    + 0.08%
    0.1% profit.

  • In Asia, Shanghai Composite SHCOMP,
    -1.44%
    It is down 1.4%, while the Hang Seng HSI is down,
    + 0.33%
    It rose 0.3% in Hong Kong and the Nikkei 225 in Japan,
    + 0.41%
    0.4% profit.

Steve Goldstein contributed to this report.

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