By Yasin Ebrahim
Investing.com -- The S&P 500 moved off session lows Tuesday, but remained under pressure from a slump in social media stocks after Snap warned on profit amid a deteriorating economic backdrop.
The S&P 500 fell 1.3%, the Dow Jones Industrial Average slipped 0.3%, or 109 points, the Nasdaq was down 2.7%.
Snap (NYSE:SNAP) fell more than 40% after the social media company cut its guidance on revenue and profitability, citing a faster-than-anticipated deterioration of the macroeconomic environment.
The warning from SNAP “will sound the alarms on the deteriorating macro's evolving effects on digital advertising,” RBC said in a note after slashing its price target on the stock to $17 from $25.
Concerns about a weaker backdrop of advertising spending sent shockwaves throughout social media stocks. Meta Platforms (NASDAQ:FB) fell more than 9%, Twitter (NYSE:TWTR) was down more than 5%, while Pinterest (NYSE:PINS) slumped 23%.
Zoom Video Communications (NASDAQ:ZM), meanwhile, sidestepped the selling after the software company reported better-than-expected quarterly results and raised its annual guidance, sending its shares more than 6%.
Elsewhere on the earnings front, companies continued to flag the impact of inflation and worries about the growth outlook.
Abercrombie & Fitch (NYSE:ANF) plunged more than 30% as the retailer cut its sales outlook for the year after reporting a surprise first-quarter loss owing to rising transportation and product costs.
AutoZone (NYSE:AZO) rose more than 4% following better-than-expected quarterly results.
Homebuilders were also adding pressure to the broader market on data showing new home sales fell to the lowest level since April 2020 as mortgages hover at their highest levels since 2009.
“The Federal Reserve is pumping the brakes; the most interest-rate sensitive sectors, notably housing, are cooling,” Grant Thornton said in a note.
Toll Brothers (NYSE:TOL), which reports quarterly results after the market closes Tuesday, fell more than 4%, Lennar (NYSE:LEN) and KB Home (NYSE:KBH) were also in the red.