The New York Stock Exchange fell on Tuesday as investors were worried by cautious forecasts from US companies, which acknowledge a slowdown ahead.
The Dow Jones lost 2.38%, the tech-dominated Nasdaq index fell 3.95% and the broader S&P 500 index fell 2.81%.
“There was caution today leading up to the results from Alphabet and Microsoft,” said Angelo Kourkafas, an analyst at Edward Jones, “but it’s still a little surprising because there was no really identified catalyst.”
For example, Alphabet (-3.04%) and Microsoft (-3.74%) dragged the Nasdaq down, as did Meta (Facebook, -3.23%), which will present its results on Wednesday, or Apple (-3.73%) and Amazon (-4.58) %), expected Thursday.
Together, these five companies weigh 21% of the S&P 500.
“In the past, we’ve seen technology stocks falter as bond yields rose,” said Angelo Koukafas. “But today rates are falling due to growth concerns.”
The yield on 10-year US government bonds fell to 2.72%, the lowest level in almost two weeks.
Post-trade, Alphabet reported revenue and net profit below analysts’ forecasts. In post-close electronic trading, the stock lost nearly 5%.
“There is clear concern that even companies whose results are above expectations tend to lower their forecasts,” said Tom Cahill of Ventura Wealth Management.
So if the GE conglomerate (-10.34% to $80.59), while splitting into three separate entities, outperformed analysts’ expectations in terms of sales and net income, he indicated it was moving toward the lower end of the year. the previously announced target was going to be reached.
The airline JetBlue (-11.41% to $11.57) will reduce the volume of its flights by 10% this summer to improve the reliability of its timetables, but also to account for rising kerosene prices and to maintain its margins.
Courier and delivery service UPS fell (-3.47% to $183.05) despite better than expected. The group also confirmed its targets and doubled the amount of its share buyback program.
China in the spotlight
Investors kept a close eye on China, where the containment scenario in Beijing is becoming clearer, while authorities in Shanghai on Tuesday reported 17,000 new cases of coronavirus in the past 24 hours.
“The concern is that if China continues to restrict, it could lead to further disruptions in the supply chain,” in addition to the slowdown in Chinese demand, Tom Cahill noted.
“This could weigh on business results” in the second quarter and beyond as companies are currently releasing their first quarter operating results.
As an aside, the day after announcing an agreement on Elon Musk’s acquisition of Twitter, the blue bird title, frankly, slipped (-3.91% to $49.68) from the price of the proposed acquisition, or $54.20 per share.
If the operation is a success, Twitter will be delisted less than ten years after the IPO.
In free fall on Monday (-12.90%), DWAC, the publicly traded vehicle that will house Donald Trump’s media company, recovered Tuesday (+14.25% to $40.80).
The former president said he would not return to the Musk version of Twitter, even if the opportunity was offered.
Tesla (-12.18% to $876.42) is experiencing the confinements in China getting worse, but also the commitment of his boss in the Twitter file. Since the beginning of the saga, the automaker’s title has lost more than 20%.
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