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NEW YORK (AP) — Stocks are opening lower on Wall Street Tuesday, led by drops in tech heavyweights like the parent companies of Facebook and Google. The S&P 500 index fell 1.2% in the early going, and the tech-heavy Nasdaq was down almost twice as much, 2.3%. The Dow Jones Industrial Average, which tracks 30 major blue chips, was off 0.5%. A stark profit warning from Snapchat’s parent company spooked investors into dumping the stocks of major social media companies. Snap’s stock price sank 39%, while Meta was off 9% and Alphabet fell 6.3%. The yield on the 10-year Treasury fell to 2.79%.
Shares in Asia finished lower and European benchmarks were in decline at midday, one day after U.S. markets got off to a strong start to the week, led by technology stocks.
President Biden, who announced a new economic and trade initiative with the region while on a visit to Japan, confirmed to reporters that he planned to discuss the punitive tariffs imposed on China during former President Donald Trump’s administration with Treasury Secretary Janet Yellen once he returns to Washington.
“I’m talking with the secretary when I get home. We are considering it,” Biden said.
The comments raised optimism over the potential for an easing of tensions between the world’s two biggest economies, but not all were convinced.
“Talks of reducing tariffs on China’s exports have surfaced before and the lack of any concrete follow-through remains an element of disappointment for markets,” said Yeap Jun Rong, market strategist at IG in Singapore.
Biden joined leaders of Japan, Australia and India in Tokyo for a summit of the “Quad,” or the Quadrilateral Security Dialogue, where Biden made the case that the world has a shared responsibility to do something to assist Ukrainian resistance against Russia’s aggression. The summit came on the final day of Biden’s first trip to Asia as president.
European shares slipped in midday trading, with France's CAC 40 and Germany's DAX both sliding 0.9% and Britain’s FTSE 100 edging down 0.2%.
Investors are also monitoring the impact of the war in Ukraine on commodity prices and the possible blow to global economic growth from pandemic lockdowns in China.
Japan's benchmark Nikkei 225 lost 0.9% to 26,748.14. Australia's S&P/ASX 200 slipped 0.3% to 7,128.80 and South Korea's Kospi sank 1.6% to 2,605.87. Hong Kong's Hang Seng shed 1.8% to 20,112.10, while the Shanghai Composite declined 2.4% to 3,070.93.
Investors fear the U.S. central bank could go too far in raising rates or move too quickly. That could slow business activity and potentially bring on a recession. On Wednesday, investors will get a more detailed glimpse into the Fed’s decision-making process with the release of minutes from the latest policy meeting.
Technology shares that took off during the pandemic are now taking the brunt of selling thanks to their hefty prices. Casting a shadow, social media messaging platform Snap Inc. surprised investors with a warning late Monday.
Shares of Snap tumbled 30% after the CEO told employees that the company would fall short of quarterly targets for both growth and revenues. Wall Street is trying to figure out if Snap's problems are isolated, or if it's a canary in the social media coal mine.
Meta Platforms, the parent of Facebook, and Twitter both have their annual shareholder meetings this week and both were punished early Tuesday. Meta is the biggest loser on the S&P, falling 8%. Twitter fell almost 4% and Alphabet fell almost 5%.
“Snap’s stock price went snap, crackle, pop, as it fell by over 30% in extended trading after the CEO, in a note to employees, said it would miss quarterly guidance on growth and revenues," Jeffrey Halley of Oanda said in a commentary.
In premarket trading, Snap's shares fell $6.84, nearly 31%, to $22.47, with less than two hours before U.S. markets open. Snap's slide was dragging social media down with it early Tuesday, as Facebook parent Meta tumbled almost 8% and Twitter fell almost 4% .
Wall Street will get a few economic updates this week from the Commerce Department. On Thursday it will release a report on first-quarter gross domestic product and on Friday it will release data on personal income and spending for April.
In energy trading, U.S. benchmark crude gained 33 cents to $110.62 a barrel in electronic trading on the New York Mercantile Exchange. It added 1 cent to $110.29 per barrel on Monday. Brent crude, the international standard for pricing, rose 38 cents to $113.60 a barrel.
In currency trading, the U.S. dollar edged down to 127.34 Japanese yen from 127.78 yen. The euro cost $1.0720, up from $1.0688.