Investors dumped stocks on Tuesday and betted on less aggressive policy from the US Federal Reserve, after comments from social media group Snap and disappointing economic data fanned concerns that growth in the country was poised to slow.
The Nasdaq Composite, which is weighted towards big US tech companies, fell 2.3 per cent on Tuesday. The more evenly balanced S&P 500, which tracks the fortunes of the largest publicly traded companies, declined 0.8 per cent. By the closing bell, however, both indices had eased off lows plumbed early in the session.
US stocks have been hard hit this year, with the average stock in the broad-based Russell 3000 down more than 40 per cent from recent highs, as the Fed raised interest rates in its bid to tamp down inflation. Recent data pointing to slower growth has added to the pressure on stocks, as investors warn the US economic recovery following the coronavirus pandemic could be waning.
Money managers have instead hoovered up US government debt as they have swapped riskier investments for safe havens. The 10-year Treasury yield, which moves with economic growth and interest rate expectations, fell 0.09 percentage points to 2.76 per cent, its biggest one-day rally in price since late April.
Investors’ nerves were rattled after Snap said late on Monday that the “macroeconomic environment has deteriorated further and faster than anticipated” since it issued guidance in April. The group said its sales and profits for the current quarter would come in below its previous expectations. Snap shares fell 43 per cent on Tuesday.
Read more on the day’s market moves here.