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US stocks face bad news again: Snap lowers performance guidance, may once again drag down technology stocks.

US stocks closed higher on Monday, with major indexes rebounding after consecutive declines.

The Dow rose 618.34 points, an increase of 1.98%, to 31,880.24 points; the Nasdaq rose 180.66 points, an increase of 1.59%, to 11,535.27 points; the S&P 500 index rose 72.39 points, an increase of 1.86%, to 3,973.75 points.

However, in pre-market trading on Tuesday, May 24th, due to the profit and revenue warning issued by social media giant Snap (SNAP), major stock index futures fell, potentially leading to a sharp decline in technology stocks and large caps after a strong rebound on Monday.$Snap Inc (SNAP.US)$

Futures contracts linked to the Dow Jones Industrial Average fell 287 points, or 0.9%, to 31,552, while S&P 500 futures dropped 1.4%, and futures of the Nasdaq, dominated by growth tech stocks, declined by 2%.

The U.S. stock market is currently in a situation of volatility due to multiple factors. On Monday, U.S. President Biden's comments on tariffs boosted market sentiment. The news of semiconductor giant Broadcom's possible acquisition of VMware, the former employer of Intel's CEO, directly stimulated the market. According to media reports, this potentially one of the largest acquisitions in technology company history is expected to be announced this Thursday local time.

JPMorgan (JPM) brought hope to the U.S. stock market at the investor day held on Monday. It not only raised its forecast for net interest income and maintained its 17% return on tangible equity target, but its CEO Jamie Dimon's view of the U.S. economy was also quite optimistic. This boosted JPMorgan's stock price by 6.2% and uplifted the entire banking sector, with SPDR S&P Bank ETF (KBE) rising by 2.5%.

Snap lowers Q2 performance guidance, leading to a significant pre-market drop for the social media tech giant.

After Monday's rise, the U.S. stock market experienced another round of bad news from major companies in post-market trading. Social media giant Snap downgraded its second-quarter earnings and revenue expectations on the grounds of rapid economic slowdown on Monday after the market closed. The stock plummeted significantly in pre-market trading on Tuesday, dropping over 28% at the time of writing.

The company released its Q1 financial report on April 21 in Eastern Time and gave a more positive performance guidance. However, in its latest filing submitted to the SEC, the company stated: 'The degree and speed of deterioration in the macroeconomic environment since we issued our performance guidance on April 21, 2022 have exceeded our expectations.'

Renowned technology analyst and Loup Ventures co-founder Gene Munster stated that Snap's pessimistic performance forecast revision is not an isolated case but represents a broader trend. Following several retail stock underperformance last week, Snap's performance expectations downgrade may further weigh on the U.S. stock market.

This performance warning is the last thing tech stocks want to see—Meta Platforms (FB), Facebook's parent company, saw its stock plummet over 9% in post-market trading; Twitter (TWTR) plunged over 4% post-market; tech stocks were also affected, with tech giant Google-A (GOOGL) struggling in post-market trading, dropping over 4%. The Nasdaq index has already fallen by more than 26% this year, with technology giants like Apple (AAPL), Amazon (AMZN), and Google's parent company Alphabet (GOOGL) all experiencing significant declines.$Twitter (Delisted) (TWTR.US)$$Alphabet-A (GOOGL.US)$

Pre-market trading on May 24th, as of the deadline, growth tech stocks in the US fell before the market, with Meta Platforms falling more than 6%, Tesla (TSLA) falling over 3%, Netflix (NFLX), Amazon (AMZN) briefly falling more than 2%, and Apple (AAPL) falling nearly 2%.$Netflix (NFLX.US)$$Amazon (AMZN.US)$

Both A-share and Hong Kong stocks fell, with A-shares expected to bottom out in the second quarter.

On May 24th, the Shanghai and Shenzhen stock indexes fell all day, with northbound funds net selling unilaterally. The Shanghai Composite Index and the SSE Science and Technology Innovation Board 50 Index both fell below 3100 and 1000 points respectively. The total market turnover was 0.99 trillion yuan, compared to 0.86 trillion yuan the previous day.

On the market, blue-chip sectors and hot tracks fell across the board, with BYD, Longi Green Energy, Hikvision, WuXi AppTec, Luxshare Precision, Hengrui Pharmaceuticals, China Securities Co.,Ltd., China Northern Rare Earth, and others adjusting. Morgan Stanley Fund believes that with the pandemic under control and companies gradually resuming work and production, the most pessimistic stage in the market may have passed, and A-shares are expected to bottom out in the second quarter.

The SSE Composite Index closed at 3070.93 points, down 2.41%; the Chinext Price Index was at 2318.07 points, down 3.82%; the Shenzhen Component Index was at 11065.92 points, down 3.34%; the CSI 300 Index was at 3959.15 points, down 2.34%; the SSE Science and Technology Innovation Board 50 Index was at 996.65 points, down 4.73%; the SSE 50 Index was at 2734.19 points, down 1.74%; the CSI 400 Index was at 4691.07 points, down 3.19%.

Hong Kong stocks also maintained a downward trend throughout the day, with the Hang Seng Index closing down 1.75%, the Hang Seng China Enterprises Index down 1.98%, and the Hang Seng Tech Index down 3.48%.

As of the close, 548 stocks rose in Hong Kong today, 1330 fell, and 991 closed flat.

Article | 'Barron's China Market Observation Group'

Editor | Liang Mu

Original article from Barron's China, unauthorized reproduction is prohibited.

(This article is for reference only and does not constitute investment, accounting, legal, or tax advice.)

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