Nasdaq Composite falls more than 2% as ad-backed tech stocks retreat
Other tech stocks that rely on digital ad spend have also declined. google parent alphabet inc,
slipped 5.5%, while Meta Platforms Inc.,
dropped 8.4%. Streaming-Video Company Roku Inc.,
was recently down 16%, while Twitter Inc.,
which was agreed to sell to Tesla Inc last month,
Chief executive Elon Musk traded 4.3% lower.
The tech-focused Nasdaq Composite lost 2.7%, after ending Monday up 1.6%. The Nasdaq, down 28% so far this year, has been hit harder than other major US indices and is on pace for its worst first 100 trading days of a year on record. The broad-based S&P 500, by comparison, is down 18%.
Bets on tech stocks are wide open this year, punished by the Federal Reserve’s plan to raise interest rates to tame inflation at a four-decade high. The broader market has also pulled back geopolitical turmoilInflationary pressures and the worldwide economic slowdown.
“The decline in Snap is confirmation that the market has little tolerance for high-growth, long-term companies with more volatile profitability in a risk-averse environment,” said Robert Stimpson, chief investment officer at Oak Associates. Mr. Stimpson’s firm currently prefers large-cap, blue-chip companies over volatile tech stocks.
Analysts said Snap’s warning could signal that ad spending is peaking.
“This is one of the first areas where businesses have started to cut when times are tough,” said Fiona Cincotta, senior financial markets analyst at UK-based trading services firm City Index. “The fact that we are seeing that now is really striking because the situation is deteriorating so rapidly for businesses and the broader economy.”
Leading the trend Tuesday was another pandemic winner: Videoconferencing company Zoom Video Communications Inc.,
Which rose 6.3% after raising its profit outlook, reporting its slowest growth rate on record.
best buy company,
Shares fell 0.2% after the consumer electronics retailer reported declining sales and profit in the latest quarter. The company said that its results for the current fiscal will be worse than before amid increased promotions and higher supply-chain expenses.
Write to Hardik Singh at [email protected]
Credit: www.Businesshala.com /