Technology stocks fell Tuesday, with investors ditching shares of companies that rallied during the pandemic.
shares lost 42% to $13.15, on pace for their largest percentage decline on record. The company issued a profit warning Monday and said it planned to slow hiring and spending.
Other tech stocks that rely on digital advertising spending also fell. Google parent
slipped 5.5%, while
dropped 8.4%. Streaming-video company
was recently down 16%, while
, which last month agreed to be sold to
traded 4.3% lower.
The tech-focused Nasdaq Composite declined 2.7%, after it ended Monday up 1.6%. The Nasdaq, down 28% so far this year, has been hit harder than other major U.S. indexes 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 have unraveled this year, punished by the Federal Reserve’s plan to raise interest rates to tame four-decade highs in inflation. The broader market has also pulled back because of geopolitical turmoil, inflationary pressures and a world-wide economic slowdown.
“The decline in Snap is confirmation that the market has very little tolerance for higher-growth, long-duration 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 to volatile tech stocks.
Snap’s warning could signal that advertising spending has peaked, analysts said.
“It tends to be one of the first areas where businesses cut back when they do start to make cuts when times get tough,” said
senior financial markets analyst at U.K.-based trading services firm City Index. “The fact that we’re seeing that now is really striking because the situation is deteriorating so rapidly for businesses and for the broader economy.”
Bucking the trend Tuesday was another pandemic winner: videoconferencing company
, which rose 6.3% after raising its profit outlook while reporting its slowest growth rate on record.
shares ticked down 0.2% after the consumer electronics retailer reported falling sales and profit for the latest quarter. The company said its results for the current fiscal year will be worse than it had previously predicted amid increased promotions and higher supply-chain expenses.
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