Stocks fell Tuesday as a steep decline in technology stocks deepened Wall Street’s losses after a brutal start to 2022. The Dow Jones Industrial Average closed with a loss of 809 points Tuesday, falling 2.4 percent. The Nasdaq composite closed with a loss of 4 percent and the S&P 500 index fell 2.8 percent by the closing bell
Following a year of stellar gains, all three indexes have fallen since the start of the year as investors brace for the continued war in Ukraine, high inflation, and the Federal Reserve’s attempts to cool off-price growth to cut into corporate profits. Tech stocks that made up much of the market’s massive gains last year are among the leading forces behind the steady decline across Wall Street.
The tech-heavy Nasdaq is down more than 21 percent on the year, falling into a bear market as shares of Apple, Meta, Alphabet, Netflix, and Tesla plunged from record highs. All posted significant losses Tuesday, with a 10 percent drop in Tesla stock leading the index downward. The S&P is down 13 percent on the year, beyond what investors consider a correction, and the Dow is down 9.1 percent since the start of 2022.
“The risk-reward is just not there into big-cap tech earnings,” Satori Fund founder and senior portfolio manager Dan Niles told CNBC’s “TechCheck” on Tuesday. “I expect every single one of them to see forward numbers go down.”
Microsoft and Google parent Alphabet both saw shares close down more than 3% ahead of reporting earnings. Facebook parent Meta, Amazon, and Apple also finished lower Tuesday, with earnings results slated for later this week.
Netflix shares dropped nearly 5.5% and hit a new multi-year low. Last week, Netflix plunged 35% in a single day after reporting a surprising subscriber loss for the first quarter. The strength in Big Tech stocks in recent years “is likely to burst when fundamentals start to meaningfully deteriorate as the overall economy slows,” Wolfe Research’s Chris Senyek said in a research note.
Worries about the global economy loomed. Investors are worried about a Covid surge in China. Regarding the war in Ukraine, a top Russian official said the threat of nuclear war is real. Plus, high inflation in the U.S. is denting demand for goods from houses to sneakers.