The New York Stock Exchange is seen in New York on Thursday, Feb. 24, 2022. (AP Photo/Seth Wenig, File)
By Damian J. Troise
Stocks closed broadly lower on Wall Street Tuesday, weighed down by sharp declines in Big Tech stocks that also left the Nasdaq with its worst drop since September 2020.
Investors are busy reviewing the latest round of corporate earnings and are facing a particularly heavy week with results from some of the nation's biggest companies. The latest corporate report cards are hitting Wall Street amid lingering concerns about rising inflation, interest rate hikes and potential damage to global economic growth.
The S&P 500 fell 120.92 points, or 2.8% to 4,175.20. The benchmark index closed the day with 95% of its stocks losing ground. The Dow Jones Industrial Average fell 809.28 points, or 2.4%, to 33,240.18.
The tech-heavy Nasdaq bore the brunt of the day's losses. It fell 514.11 points, or 4%, to 12,490.74. That's its worst drop since Sept. 8, 2020. The index is now down 20% so far this year as investors shun the ultra-pricey tech sector, which had made gangbuster gains for much of the pandemic.
With interest rates set to rise as the Federal Reserve steps up its inflation fight, traders are less and less willing to endure the lofty prices they had been paying for Microsoft, Facebook’s parent company and other tech giants.
Microsoft fell 3.7%. Google's parent company, Alphabet, fell 3.6% in regular trading and lost another 6% in after-hours trading after reporting results that fell short of analyst estimates.
More big technology companies are on deck to report earnings this week, including Facebook parent's company, Meta, on Wednesday, and Apple on Thursday.
Tesla slumped 12.2% over concerns that CEO Elon Musk will be distracted and less engaged in running the electric vehicle maker as he buys social media company Twitter, which fell 3.9%.
Retailers and other companies that rely on direct consumer spending also fell broadly. General Motors fell 4.5% while Nike slipped 5.8%.
General Electric fell 10.3% for one of the sharpest losses on the market after telling investors that inflation and other pressures are weighing on its profit forecast for the year.
Bond yields fell. The yield on the 10-year Treasury fell to 2.73% from 2.82% late Monday.
Energy companies eked out a gain, the only one of the 11 sectors in the S&P 500 to do so. The price of benchmark U.S. crude oil rose 3.2%.
Stocks have been shaky recently, with the S&P 500 coming off a three-week losing streak.
“It’s the market getting a little more comfortable with a slowdown at best and recessionary fears at worst,” said Ross Mayfield, investment strategy analyst at Baird.
The last few days have been volatile as Wall Street also tries to assess how China's strict lockdown measures to fight COVID-19 will impact the broader global economy, including hurting demand in the world's second-largest economy. It could be prompting a resetting of expectations while Wall Street is also still focused on the Federal Reserve's plan to raise its benchmark interest rates this year.
“The market had gotten comfortable, to an extent, with the Fed, but when you layer on demand destruction in China, it’s a little much for the market to stomach,” Mayfield said.
Outside of technology companies, earnings for industrial and retail companies remain a key focus of Wall Street for the rest of the week. Airplane maker Boeing reports its results on Wednesday. Industrial bellwether Caterpillar reports its results on Thursday, along with McDonald's and Amazon.
Investors are closely reviewing the latest round of corporate report cards to get a better sense of how different industries are handling rising inflation, which has prompted many companies to raise prices. The results will also give a clearer picture of how consumers are reacting to higher prices on everything from food to clothing and gasoline.
In economics news, the Conference Board reported that consumer confidence dampened slightly in April but remains high. And on Friday the Commerce Department releases its personal income and spending report for March.
Persistently rising inflation has prompted the Fed to shift its monetary policy in order to aggressively fight inflation. The chair of the Fed has indicated the central bank may hike short-term interest rates by double the usual amount at upcoming meetings, starting next week. It has already raised its key overnight rate once, the first such increase since 2018.
Economists and investors are concerned that the U.S. economy might slow sharply or even fall into a recession because of the big interest-rate increases the Fed is expected to push through.
At-home medical labs company Getlabs raised $20 million in a Series A round, led by Emerson Collective and the Minderoo Foundation. Getlabs aims to be the boots-on-the-ground partner to telehealth. The company says more than 70% of medical decisions still require collecting diagnostic tests in person, and that it fills that void by delivering health care directly to their patients' homes. Founder & CEO of Getlabs Kyle Michelson joined Cheddar News' Closing Bell to discuss.
The White House laid out plans for a $5 billion investment into a national network of charging stations to ease EV driving anxiety. Bruce Brimacombe, CEO of EV infrastructure GOe3 joined Cheddar News to discuss how much needs to be done for drivers to get over the fear of running out of energy. "People need to be able to do what they're doing now," he said. "But that is the way that if you're going to buy an electric car, you got to feel like you're not changing your world." Brimacombe noted that building out the infrastructure between cities was GOe3's own focus.
U.S. automakers are saying that the blockade of the Ambassador Bridge, a crucial border crossing between the U.S. and Canada, is affecting their production lines. Michelle Krebs of Cox Automotive warns that the disruption "couldn't come at a worst time," amid chip and labor shortages in Detroit.
AND DETROIT-BASED AUTO MAKERS SAY THEY ARE SHUTTING DOWN PLANTS OR SCALING BACK PRODUCTION BECAUSE OF PARTS SHORTAGES.
Sonos reported better than expected Q1 earnings amid chip shortage with the release of its Roam product. CFO Brittany Bagley joined Cheddar News to discuss the smart speaker maker's successful report and its plans to hit its 2024 targets as people leave their homes as pandemic restrictions ease. "Even as people head out in the world, it doesn't mean they don't like to listen to music at home or watch a streaming movie at home," she said. "So there's still a real role for us and our products in peoples lives, sort of, no matter what else they're doing."
Lynn Martin, president of the NYSE Group, explains why investors at the New York Stock Exchange should still feel confident despite the recent Wall Street volatility and discusses the landscape for 2022 when it comes to IPOs and retail investors.
The merger of WarnerMedia and Discovery received Justice Department approval on Wednesday, and Patty Hirsch, EVP of consumer and digital platforms at WarnerMedia, joined Cheddar News to discuss current and future offerings from the media conglomerate that will control both HBO Max and Discovery+. "Content really drives so much, and CNN has always had a very long history of creating an incredible documentaries, incredible content … and this service I think is going to ultimately provide the kind of content consumers want and the kind of content that consumers are going are going to pay for," she said. Hirsch also discussed NFTs in use through its Turner Sports and DC brands.
Black entrepreneurs lead the way in the creation of new businesses, but they often cannot get the necessary funding to get their business off the ground. The Fearless Fund is on a mission to change that, and help Black business owners get venture capital. The fund also offers a unique grant program meant to help entrepreneurs with growth, peer coaching, and more, including grants between $10,000 and $20,000. Arian Simone, Co-Founder and General Partner of Fearless Fund, joins Closing Bell to discuss the Fund's mission, how it helps Black entrepreneurs, and more.
Multinational food company Kellogg’s reported an earnings beat amid supply chain issues and an extended labor strike. Kellogg’s Chairman and CEO c joined Cheddar News to discuss overcoming the obstacles and what's to come for the company. "The first half of the year is really going to be one about rebuilding inventory, and into the second quarter, starting to reestablish promotional activity for our customers and our consumers," Cahillane said. "And then the back half of the year, obviously, we're really much more back in business, and we expect to exit the year with our business in cereal being just as strong as it's ever been."
Sting has sold his catalog of more than 600 songs for $300 million to Universal Music. The deal gives the label the rights to all of his work, including “Every Breath You Take," as well as all future royalties.
Miller Lite is opening the first branded bar in the metaverse, by way of Decentraland, as a way to advertise during the Super Bowl this year without buying an expensive TV commercial slot. Sofia Colucci, global vice president of Miller Family of Brands, joined Cheddar to talk about the new marketing concept. "We have a lot of great partnerships with NFL teams throughout the year but were shut out of advertising during the Super Bowl game, so this pushes us to think creatively and also think of what feels really relevant right now," Colucci said. "There's no question that there's a lot of excitement with the metaverse, and we wanted to participate but in a way that felt right for Miller Lite."
