Stock Futures Tumble, Snap Sinks — and What Else Is Happening in the Stock Market Today

A Wall Street sign outside the New York Stock Exchange.

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Stock futures pointed lower Tuesday after a profit and revenue warning from social media company Snap sent technology shares and the broader market tumbling after a strong rally Monday.

Contracts linked to the Dow Jones Industrial Average fell 287 points, or 0.9%, to 31,552, S&P 500 futures were down 1.4% and futures on the tech-heavy Nasdaq dropped 2% .

Snap (ticker: SNAP) lowered its earnings and revenue expectations for the second quarter, citing a rapidly slowing economy. The stock was declining sharply in premarket trading Tuesday, down 28%. Shares of Meta Platforms (FB), the parent company of Facebook, declined 6%.

The warning was the last thing technology shares needed — the Nasdaq has declined more than 26% this year with steep losses in tech stalwarts such as Apple (AAPL), Amazon.com (AMZN) and Google parent Alphabet (GOOGL).

The warning from Snap “stopped all the ‘worst is over’ pundits in their tracks,” said Jeffrey Halley, a senior market analyst at Oanda. “It highlights how fleeting swings in sentiment are now and also that investors are running at the first sign of trouble.”

Stocks posted strong gains on Monday after President Joe Biden said he was considering reducing tariffs on China that had been imposed by the Trump administration. The gains came after the S&P 500 last Friday narrowly avoided closing in a bear market. The Dow rose 2% on Monday, the S&P 500 jumped 1.9%, — leaving it down 16.6% for the year — and the Nasdaq rallied 1.6%.

“The market continues to turn itself inside out and back to front as it tries to decide if it has priced all of the impending rate hikes, soft landing or recession, inflation or stagflation, China, Ukraine, U.S. summer driving season, supply chains, the list goes on,” Halley added. “The result is a day-to-day chop-fest, and it seems clear that volatility is the winner.”

That volatility could continue as Tuesday’s trading session begins, and run through the week as Wall Street digests the release Wednesday of minutes from the latest Federal Reserve meeting. The central bank has been raising interest rates in an effort to cool historically high inflation and slow the economy.

Here are some other stocks on the move Tuesday: 

Zoom Video (ticker: ZM) rose 6.3% in premarket trading after the videoconferencing company posted better-than-expected profit in its fiscal first quarter ended April 30.

Best Buy (BBY) fell 3.6% ahead of the release of its fiscal first-quarter earnings Tuesday.

Write to Joe Woelfel at joseph.woelfel@barrons.com