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India's First International News Journal

Wednesday, June, 29, 2022

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Snap shock sends Nasdaq plummeting

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Snapchat mother Snap corrects its forecast significantly downwards, whereupon investors also punish other providers in the industry. While the leading index Dow Jones Industrial just manages to break into the profit zone, the technology-heavy Nasdaq 100 is losing a lot of feathers.

The operator of the US messenger service Snapchat has shocked stock investors with a bleak outlook and sent the stock exchanges in New York plummeting. Snap shares fell a good 43 percent, stronger than ever. The Nasdaq index fell 2.3 percent to 11,264 points. The broader S&P 500 lost 0.8 percent to 3941 points. The Dow Jones index of standard stocks turned positive towards the end of trading. It increased by 0.15 percent to 31,929 jobs.

Snap’s lowered expectations for the current quarter are an indication of the deteriorating economy and advertising business, said analyst Brent Thill of investment bank Jefferies. Stocks of heavily advertising-dependent companies such as Twitter, Google’s parent company Alphabet, Meta Platforms, and Pinterest slipped between five and 24 percent. “When the (economic) outlook is gloomier, ad spending will be reduced. This will put investors in a bad mood and create more storm clouds, just when many were hoping the market slump was about to bottom,” said Investment- Expert Russ Mold from wealth manager AJ Bell. The investment experts at BlackRock stated that three developments are currently exacerbating investors’ concerns about the economy. “The even harsher rhetoric from the US Federal Reserve, reports of clouded earnings prospects at major US retailers and weak economic indicators from China.” Stock market volatility is likely to remain high ahead of Wednesday’s Fed minutes release, analysts at ActivTrades said. “An increasing number of investors and analysts are questioning the Federal Reserve’s current aggressive stance and are awaiting further details.” Trader Dennis Dick of brokerage Bright Trading said it must be clear that the rate hikes are counteracting high inflation without triggering a recession. ‘Until then, the motto on the markets is ‘ Abercrombie & Fitch shares fell about 28 percent after the clothing retailer lowered its full-year sales outlook.

The shares of the fitness equipment provider Nautilus slipped by around 19 percent. For the current quarter and the 2022/2023 financial year, Nautilus warned of results below market expectations. The industry environment remains difficult, commented analyst Mark Smith from the investment bank Lake Street. The trade is sitting on high inventories that were built up during the pandemic. Nautilus rival Peloton’s titles fell more than eight percent.

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