Why Is the Stock Market Down Today? Dow Drops as Snap Guidance Rekindles Recession Fears.

The stock market was falling sharply Tuesday, after


blamed the economy when it lowered its sales and profit guidance for the current quarter, rekindling worries about a recession.

“Global equities sold off with lower revenue and profit guidance from Snap Inc. serving as the catalyst,” wrote Ian Lyngen, head of U.S. rates strategy at BMO Capital Markets. 

Snap (ticker: SNAP), the parent company of the popular social media app Snapchat, said in a filing with the Securities and Exchange Commission that it will likely see sales and Ebitda—short for earnings before interest, tax, depreciation, and amortization—come in at the lower end of its guidance range for the quarter. That is because “the macroeconomic environment has deteriorated further and faster than anticipated,” the company said in the filing. 

The stock tumbled 41%. 

The company’s EBITDA guidance range for the quarter was between $0 and $50 million on sales of just over $1.1 billion. With the higher end of that range now unlikely, RBC analysts lowered their 2022 EBITDA estimate to $310 million from $692 million and cut their 2023 estimates by a similar percentage as well. 

For the rest of the digital advertising and e-commerce area, “the [Snap] read for the space is broadly negative,” wrote RBC analyst Brad Erickson. 


Meta Platforms

(FB) stock dropped 7.6%.


(GOOGL) stock fell 4.8%, while




(ETSY), and


(EBAY) fell 21%, 7.6%, and 1.6%, respectively.

(AMZN) stock dropped 2.3%. 

For the rest of the market, the fear is that consumers are spending less. That is consistent with what


(TGT) showed on its earnings report, which revealed that consumers were spending more on essential items and less on discretionary products like clothing and electronics.  

“The economy is slowing down, the consumer is in trouble,” wrote NatAlliance Securities’ Andrew Brenner. 

Two main culprits are to blame for the consumers’ current challenge: inflation and interest rates. Inflation remains stubbornly high as geopolitical conflicts stemming from Russia cause commodity prices to soar and companies have trouble meeting a still-high level of economic demand with enough supply. Central banks around the globe are trying to lower inflation by lifting short-term interest rates, thereby further reducing economic demand.

Ultimately though, Snap’s earnings rekindled worries about a recession, worries that the market seemed to be willing to put aside following

JPMorgan Chase

(JPM) investor day Monday. That, in turn, has put the brakes on a big rally in the past few days. The S&P 500 had gained 4.3% from a Friday afternoon bottom when the index hit bear market territory to Monday’s close. The tech-heavy Nasdaq gained 4.5% in the same span.

That was part of a picture that included flows of capital into technology stocks. Retail investors, such as those on popular trading apps like Robinhood or TD Ameritrade, have purchased a net $979 million a week in S&P 500 technology stocks and exchange-traded funds in the past month, according to Bank of America. That is more than 20 times the average net weekly inflow seen in the past three months—and it’s a major improvement from the net outflow seen in the average week in the past year. 

Now, the Snap news and the weakening consumer pose a threat to investor interest in the sector. 

“This latest warning from companies comes just as risk sentiment was trying to find a firmer footing,” wrote Fiona Cincotta, senior financial markets analyst City Index. “But actually, what it tells us is there is still more bad news to come out in the wash, which inevitably means more downside to come.”

Usually, tech stocks can perform well during tough economic times because the companies can beat profits expectations as their new adoptions and innovations grow faster than expected. But this does come at a time when those growth trends have been maturing, or slowing down, making the profits of these companies more sensitive to changes in economic demand. 

The stock market’s could mood was prompting money to move into safer assets. The 10 year Treasury bond’s price is rising, with the yield falling to 2.75%. That is also down from just over 3% in early May, a level it hasn’t been able to rise much far above in the post-financial crisis era. 

“Treasury yields plunge as risk aversion returns following a gloomy outlook from Snap,” writes Edward Moya, senior market analyst at Oanda. 

Here are some other stocks on the move Tuesday: 

Zoom Video

(ZM) rose 7.3% after the videoconferencing company posted better-than-expected profit in its fiscal first quarter ended April 30.

Best Buy

(BBY) has risen 0.5% after its sales topped estimates.

Abercrombie & Fitch

(ANF) stock tumbled 31% after reporting a surprise loss.


(PODD) has risen 7% on reports it is in talks to be acquired by


(DXCM). DexCom stock was down 8.9%.


(RBLX) stock dropped 9.2% after getting downgraded to Neutral from Overweight at Atlantic Equities. 


(AZO) stock fell 3.5% after the company reported a profit of 29 cents a share, beating estimates of 26 cents a share, on sales of $3.9 billion, above expectations for $3.7 billion. 

Write to Joe Woelfel at and Jacob Sonenshine at

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