By Caitlin McCabe
U.S. stock futures fell, putting the S&P 500 on track to flirt with bear market territory again.
Futures for the S&P 500 fell 0.9% Tuesday, while those for the Dow Jones Industrial Average lost 0.6%. Contracts for the tech-heavy Nasdaq-100 slid 1.5%.
On Monday, major U.S. indexes rallied, giving investors some breathing room after a volatile trading session the previous week. But by Tuesday, negative sentiment returned to the markets. Asian indexes broadly fell, weighed down by losses among technology stocks. European markets also traded lower.
Snap's shares fell 30% premarket, following a profit and revenue warning on Monday, during which the company noted that the macroeconomic environment has deteriorated more than anticipated. Its losses rippled to other technology stocks, with Meta Platforms down 7% before the opening bell and Google-parent Alphabet down 3.8%. Advanced Micro Devices lost 1.8%.
Investors are confronting a range of signals as they try to map out the trajectory of the U.S. economy. Many have grown worried that the Federal Reserve's plans for monetary tightening to tamp down inflation could tip the economy into a recession. That has been among the catalysts for the U.S. stock market's brutal year, which has sent the S&P 500 falling 17% from its January high, based on Monday's close.
There have been glimmers of optimism, however, such as on Monday, when JPMorgan Chase said U.S. consumers appear to be in good financial health. But that sanguine depiction was quickly counterbalanced by the disclosure from Snap, a company that had never issued a revenue warning before.
"We're going to have this rollercoaster ride for some time, as investors cling onto more optimistic data points and get fresh disappointment when there's another downbeat reading coming through," said Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown. "We don't yet know the full path of interest-rate rises or how resilient consumers will be."
Despite Tuesday's broad premarket technology selloff, there were bright spots in the market. Zoom Video Communications advanced 5.8% before the opening bell after the videoconferencing services company raised its profit outlook. Elsewhere in the market, Best Buy jumped 8.5% after reporting revenue that topped analyst expectations.
Later Tuesday, investors will receive new commentary from Fed Chairman Jerome Powell, who will give remarks at an economic summit in Las Vegas. Investors will be looking for fresh clues about his outlook for inflation, the economy and the path of interest-rate increases.
Several pieces of economic data are also due Tuesday, including U.S. new-home sales data and gauges of U.S. manufacturing activity. Earlier Tuesday, data firm S&P Global said its Purchasing Managers Index for the eurozone's services and manufacturing sectors fell in May from the month before. Factories in Europe and Japan reported a weakening of new orders amid higher costs and prices, a sign that manufacturing output will slow further over coming months.
Investors are now keeping a close watch on whether the S&P 500 enters bear market territory, defined as a drop of at least 20% from a recent high. On Friday, the benchmark index came close to finishing in a bear market, though it was saved by a late-session rally.
Tuesday's selloff in technology stocks in the premarket session sent investors scooping up government bonds, with the yield on the benchmark 10-year U.S. Treasury note falling to 2.815% from 2.857% Monday. Yields fall when bond prices rise.
Gold, considered another haven asset, advanced 0.4% to $1,855.60 a troy ounce.
Brent crude, the international oil benchmark, rose 0.4% to $113.84 a barrel, reversing losses from earlier in the session.
"You've got this push and pull with oil prices -- oil prices are being kept down somewhat by global growth, which is not a great signifier for the health of the global economy," Ms. Streeter said. "But at the same time, it's not dropping any further because of concerns about tight supply."
In Europe, the pan-continental Stoxx Europe 600 lost 0.5%. In Asia, Hong Kong's Hang Seng fell 1.7%. Japan's Nikkei 225 lost 0.9% while China's Shanghai Composite declined 2.4%.
Write to Caitlin McCabe at caitlin.mccabe@wsj.com
$(END)$ Dow Jones Newswires
May 24, 2022 07:25 ET (11:25 GMT)
Copyright (c) 2022 Dow Jones & Company, Inc.
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