U.S. stocks plunged Tuesday, accelerating what's largely been a consistent sell-off this month after a brief respite Monday. Investors are looking ahead to a batch of mega cap tech earnings in the coming days, with reports from Microsoft (MSFT) and Alphabet (GOOGL) due out after the bell.
The S&P 500 fell 1.5%, while the Dow Jones Industrial Average shed 450 points after the index staged a 500-point recovery on Monday. The tech-heavy Nasdaq Composite tumbled 2.6%.
Investors are in the heart of earnings season, with the S&P 500’s most heavily-weighted components scheduled to report earnings results this week. Facebook parent company Meta (FB), Apple (AAPL), and Amazon (AMZN) are also set to report quarterly results through Thursday.
As of Friday, one-fifth of companies in the index have reported results for the first quarter so far, with 79% reflecting an earnings beat for the period – above the five-year average of 77%, according to the latest available data from FactSet. The magnitude of the earnings beat, however, is below the five-year average: 8.1%, compared to 8.9%.
“The lower earnings growth rate for Q1 2022 relative to recent quarters can be attributed to both a difficult comparison to unusually high earnings growth in Q1 2021 and continuing macroeconomic headwind,” John Butters, a FactSet senior earnings analyst, said in a note.
U.S. stocks paralleled movements in global equity markets on Monday, with major stock indexes in Europe and Asia largely falling on renewed concerns a COVID outbreak in China may spur another wave of lockdowns and further disrupt global supply chains.
Worries of an economic slowdown also weighed on bonds and oil, with the 10-year Treasury yield retreating back to 2.8% and West Texas intermediate crude oil futures edging below $100 per barrel.
“I think the most interesting thing happening in China right now is not that the yuan's moving and not that the economy's slowing – it's that everything that's happening right now, we knew weeks ago,” China Beige Book CEO Leland Miller told Yahoo Finance Live. “We knew that the economy was slowing, we knew they were not going to stimulate in a big way, we knew that lockdowns were spreading from Shanghai to other big cities, we knew the Fed was hiking, we knew there’s a policy crackdown, so it is interesting that people are seeing today as a pivotal moment.”
Elsewhere in markets, shares of Twitter jumped 5.7% after the social media giant formally announced it agreed to be acquired by Tesla CEO Elon Musk for $54.20 per share, or $44 billion. Twitter shareholders are set to receive $54.20 in cash for each share held, representing a 38% premium over Twitter's closing level on April 1.
“This is the best thing that’s ever happened to Twitter,” Hedge Fund Tips' Thomas Hayes told Yahoo Finance Live. “Elon Musk is going to rehab the building and generate a lot of value for users.”
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Originally published on Yahoo.com