[New York Stock Market] Snap Shock and Growth Rate Slowdown Concerns... Nasdaq Down 2.4%

Snapchat [Image source=Yonhap News]

[Asia Economy Reporter Kim Hyunjung] On the 24th (local time), major indices on the New York Stock Exchange closed lower due to warnings of poor earnings from social media group Snap and concerns over slowing growth in the United States.

On this day at the New York Stock Exchange (NYSE), the S&P 500 index, centered on large-cap stocks, fell 0.81% to 3,941.48, and the tech-heavy Nasdaq closed down 2.35% at 11,264.45. The Dow Jones Industrial Average rose 0.15% from the previous session to close at 31,928.62.

Snap's stock price plunged 43% on the day, leading the decline in tech stocks after announcing that its sales and profits for this quarter would fall short of expectations. In particular, Snap cited issues caused by high inflation and interest rates, supply chain disruptions, and the Ukraine war. This was especially shocking to the stock price and market as it was an unplanned announcement.

Along with Snap, Alphabet, Google's parent company, fell 5% to hit a 52-week low. Amazon dropped 3.2%, and Meta fell 8%, both hitting new lows. The Nasdaq has fallen 28% so far this year.

Worsening economic indicators also added to the gloomy market outlook on this day. According to the U.S. Census Bureau, new home sales in April plunged 17% despite an increase in housing supply. Doug Duncan, Chief Economist at Fannie Mae, said, "This data clearly shows that the housing market has changed."

Weak industrial activity in major countries also affected the market on this day. According to S&P Global, the preliminary manufacturing Purchasing Managers' Index (PMI) for the Eurozone in May was 54.4, marking an 18-month low. The UK's preliminary manufacturing PMI for May was 54.6, the lowest in 16 months. Japan's preliminary manufacturing PMI for May was 53.2, down from the finalized 53.5 in the previous month.

Across the market, there was a flow of funds seeking U.S. Treasury bonds to avoid risk assets. The 10-year Treasury yield, which moves according to economic growth and interest rate outlooks, fell 0.09 percentage points to 2.76%, marking the largest single-day rise in Treasury prices since the end of April.

Investors bet that the Federal Reserve would raise interest rates less aggressively than initially expected at the beginning of the year due to these economic headwinds. The 2-year Treasury yield, which is linked to interest rate expectations, fell 0.14 percentage points to 2.49%.