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* Snap set for worst day on record after profit warning
* Abercrombie & Fitch slumps after lowering revenue outlook
* Indexes down: Dow 0.77%, S&P 1.77%, Nasdaq 3.26%
May 24 (Reuters) - Wall Street's main indexes fell on
Tuesday, with the tech-heavy Nasdaq leading the slump, as a weak
earnings forecast from Snapchat-owner Snap Inc added to nerves
about an inflation-struck economy.
Snap Inc plummeted 39.7%, dragging down several
social media and internet stocks, after the company slashed its
second-quarter earnings forecast and said the economy had
worsened faster than expected in the last month.
The stock was set for its worst single-day drop.
Twitter Inc, Google-owner Alphabet Inc,
Meta Platforms Inc and Pinterest Inc, which rely
heavily on advertising revenue, fell between 3.0% and 24.8%.
"Snap is a proxy for online advertising and when you see
weakness there then you automatically think Facebook, Pinterest
and Google," Dennis Dick, a trader at Bright Trading LLC in Las
"The back half of the earnings season has seen major
disappointments. Expectations are a lot lower, but these
companies seem to be finding a way to even get under the lower
Nine of the 11 major S&P sectors declined in morning trade
after rising broadly in the previous session. The communication
services sector slid 5.2%.
Wall Street rebounded on Monday from a steep selloff last
week that saw both the S&P 500 and the Nasdaq
mark their longest streak of weekly declines since the dotcom
bust in 2001 on mounting concerns about a recession.
Data showed U.S. business activity slowed moderately in May
as higher prices cooled demand for services, while renewed
supply constraints because of COVID-19 lockdowns in China and
the ongoing conflict in Ukraine hampered production at
"Yesterday's rally and Friday's action suggested that the
market hit a near-term bottom, but there's still a lot of
negative sentiment ... (macro worries) are a big part of this
decline," said Peter Cardillo, chief market economist at Spartan
Capital Securities in New York.
U.S. Federal Reserve Chair Jerome Powell is scheduled to
speak later in the day, with investors looking for fresh
comments about the path of future interest rate hikes.
Markets are pricing in 50 basis point rate hikes by the Fed
in June and July..
At 10:06 a.m. ET, the Dow Jones Industrial Average
was down 246.25 points, or 0.77%, at 31,633.99, the S&P 500
was down 70.15 points, or 1.77%, at 3,903.60, and the
Nasdaq Composite was down 376.45 points, or 3.26%, at
Abercrombie & Fitch Co slumped 27.2% after the
apparel retailer trimmed its annual sales and margins outlook,
citing a surge in freight and raw material costs.
Zoom Video Communications Inc inched up 0.9% after
raising its full-year profit forecast on strong enterprise
The CBOE volatility index, also known as Wall
Street's fear gauge, rose to 29.24 points.
Declining issues outnumbered advancers for a 2.96-to-1 ratio
on the NYSE and a 4.46-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and 37 new
lows, while the Nasdaq recorded five new highs and 237 new lows.
(Reporting by Devik Jain and Anisha Sircar in Bengaluru;
Editing by Saumyadeb Chakrabarty and Shounak Dasgupta)