Market check: Nasdaq, Dow drop following Snap earnings warning
Yahoo Finance's Jared Blikre and Julie Hyman break down why markets are moving lower on Tuesday.
JULIE HYMAN: We've got stocks accelerating to the downside right now. So now the NASDAQ is off about 3.6%. And it continues this sort of really whipsaw action that I've been talking about-- yesterday up, today down deeply-- as we just see traders try and figure out what the correct positioning is in this market.
JARED BLIKRE: Well, we have a double whammy because we have the Fed getting more hawkish, trending up over time. And then we also have earnings, which are painting a picture that we might have a slowdown that really picked up quickly over the last month, basically over the last month, month and a half. And let's take a look inside the market.
Here is the NASDAQ 100. It is ugly. It's ugly. Alphabet? That's down 8%. Amazon down 4%, Tesla 6%, Facebook 10%. And a lot of this has to do with some of the earnings here, Julie. We talked a lot about these names.
JULIE HYMAN: I mean, it's Snap. It's-- a lot of it is about Snap. Can I call up Snap here for a second?
JARED BLIKRE: You bet.
JULIE HYMAN: We talked about the record drop that the stock is having. And it's at its lowest-- you know, its lowest in quite some time. The company came public back in 2017 at a $17 per share. And now we're seeing it below $14 here with this latest report.
So you have all these concerns about the implications of these numbers and people sort of extrapolating the earnings to the economy, the economy to the earnings. We had new home sales today coming in at their lowest since April of 2020, with a big month-on-month drop of 16.6%. So you just pile all this stuff up, and there's clearly really lousy sentiment out there.
JARED BLIKRE: Yeah. And let's take a longer-picture view of the market. This is going to be the Dow. I'm going to put up-- well, let me actually get to the Dow.
I'm going to put up a longer-term chart of the S&P 500 so we can look at some of those candlesticks and see how things are shaping up. Now, here let's see, there's a year to date. And here is what kind of looked encouraging two days ago. That was a hammer candle there. It shows that there was interest in buying, closed near the top. And so you have that thing it looks kind of like a hammer.
But two days later, we are back down, and we are set for the lowest close in some of these indices since November of 2020, the NASDAQ. And so it doesn't look like we have the all clear. I should point out, too, that we've seen these candlestick formations before. And all of them have eventually failed.
This was the best one, and it quickly petered out. And then this is when Chairman Powell, he got a little bit more hawkish than people anticipated. And now we're just kind of bouncing around.
Here's a three-year chart. Just want to show you the big support level that Wall Street is eyeing. Many analysts looking for 3,500. And it could go lower. It could also go up. But today, not doing that.
JULIE HYMAN: Yeah. And we keep talking about, are we in a bear market, or are we not in a bear market? Technically we are not down 20% from closing high to closing low. However, many market professionals say we're effectively in a bear market. We're down seven straight weeks for the major averages. We've seen steep selling.
And as we've reminded you before, the thing about a bear market is once you enter it, you keep going down, right?
JARED BLIKRE: Right.
JULIE HYMAN: In other words, the average depth of a bear market from peak to trough is more than 20%. And so that's why there's this concern. So even if we get these days where we see perks up, it looks like for now, the trend could be to the downside.
JARED BLIKRE: Right. And I just want to cite the research of Ryan Detrick over at LPL. Really fascinating statistics about market crashes, bear markets, when they happen outside of an economic downturn, outside of recession, tend to get bounce backs that are quick. So it's key to see if we are, in fact, in a recession this year. Most people say no. So it could be one of those quick ones. But I'm not going to bank on that just yet.
JULIE HYMAN: Could be next year, though. All right, coming up next, Akiko Fujita and Brian Cheung are going to speak with the CEO of Overtime on that company's latest investor. They'll also keep you posted on all of this action. Keep it right here.