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Techs Pull US Stocks Lower Tuesday 05/24 10:19
Stocks fell in morning trading on Wall Street Tuesday, weighed down by a big
decline in tech heavyweights over concerns about persistently rising
inflation's impact to their bottom lines.
NEW YORK (AP) -- Stocks fell in morning trading on Wall Street Tuesday,
weighed down by a big decline in tech heavyweights over concerns about
persistently rising inflation's impact to their bottom lines.
The S&P 500 index fell 2.1% as of 10:14 a.m. Eastern. The Dow Jones
Industrial Average fell 351 points, or 1.1%, to 31,524 and the Nasdaq fell 3.6%.
A stark profit warning from Snapchat's parent company spooked investors into
dumping the stocks of major social media companies. Snap plummeted 39%, while
Facebook's parent, Meta, slumped 10%. Google's parent fell 8%.
Technology and communications stocks, with their lofty values, tend to have
an outsize influence on the market. The sectors have been responsible for much
of the volatility the market has seen recently as well as a the broad decline
the market's major indexes have seen since early April as investors worry about
the impact of rising inflation on businesses and consumers.
Retailers and companies that rely on direct consumer spending also fell
sharply. Amazon shed 4.3% and Target fell 3.9%.
Bond yields fell. The yield on the 10-year Treasury fell to 2.75% from 2.86%
late Monday.
Falling bond yields weighed on banks, which rely on higher yields to charge
more lucrative interest on loans. Citigroup fell 1.9%.
Household goods companies and utilities, which are considered less risky
than other sectors, made gains.
The pile of concerns weighing on the market has pushed the benchmark S&P 500
to the brink of a bear market, which is when an index falls 20% from its most
recent record high. It is down roughly 19% from its record high set earlier
this year.
Inflation has been weighing on a wide range of industries in the form of
higher raw materials costs and more costly labor. Many businesses have been
raising prices on everything from food to clothing to offset the impact of
higher costs, but the pressure has been increasing. Key retailers, including
Target and Walmart have said that higher costs are squeezing operations. They
also raised concerns that consumers are tempering spending on a wide range of
goods.
Consumers were already getting squeezed by a supply and demand disconnect
when Russia invaded Ukraine and prompted another jump in energy prices,
including gasoline. The pain at the pump has cut into spending for many. Supply
chain problems were worsened by China's recent lockdown in several major cities
as it deals with rising COVID-19 cases.
Wall Street is also worried about the Federal Reserve's plan to fight
inflation. The central bank is raising interest rates aggressively from
historic lows, but investors are concerned that it could go too far in raising
rates or move too quickly. That could slow down businesses and potentially
bring on a recession. On Wednesday, investors will get a more detailed glimpse
into the Fed's decision-making process with the release of minutes from the
latest policy meeting.
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