Share fall in volatile trading

The losses point to a sharp turnaround from Monday, when large US indices rose after a volatile trading session last week. But a profit and income warning later on Monday from the social media company Snap acidified investor sentiment again. Asian indices fell largely in the midst of a decline in technology stocks. European markets also traded lower.

Snaps shares fell around 40% on Tuesday as investors digested comments that the macroeconomic environment has deteriorated more than expected. Concerns about snaps in Snaps̵[ads1]7; advertising revenues surged to other technology stocks that have been hit this year. Meta platforms fell 9.8% and Google parent Alphabet fell 6.3%.

Investors are facing a number of signals as they try to chart the path to the US economy. Many have worried that the Federal Reserve’s plans for monetary tightening to curb inflation could tip the economy into a recession.

Concerns about declining growth due to higher inflation have been among the catalysts that have sent the S&P 500 falling 17% to Monday from the highest in January. Investors are now watching closely whether the S&P 500 enters the territory of the bear market, defined as a fall of at least 20% from a recent peak. On Friday, the benchmark index was close to closing in a bear market, although it was rescued by a rally late in the session.

On Tuesday, when large technology companies took a hit, stocks with more foothold in the physical economy suffered less losses or gains. Consumer staples and packaged foods in the S&P 500 were the only two of the index’s 11 components in positive territory.

Tim Courtney, chief investment officer at Exencial Wealth Advisors, took it as a sign that inflation, and the Fed’s reaction, was still a bigger concern for many investors than the possibility of an economic downturn.

Wealth management customers had taken the downturn in the stock market calmly this year, but as bear market levels have approached the S&P 500, fears have built up, Courtney said.

“Last week, as we approached the magic barrier for the bear market, I think the concerns started to increase,” he said.

Disappointing earnings and warnings across the corporate landscape have exacerbated fears. Abercrombie & Fitch on Tuesday became the last retailer to claim investor sentiment after it turned into a loss in the first quarter amid higher costs. The company’s shares fell 28%.

However, there has been a glimmer of optimism. On Monday, JPMorgan Chase said that American consumers appear to be in good financial health. But the bizarre portrayal was quickly offset by the revelation from Snap, a company that had never issued a revenue warning before.

“We’ll be having this roller coaster for a while, as investors cling to more optimistic data points and get new disappointment when it comes to another disappointing reading,” said Susannah Streeter, senior investment and market analyst at Hargreaves Lansdown . “We do not yet know the full course of interest rate hikes or how resilient consumers will be.”

Despite Tuesday’s broad technology sales, there were bright spots in the market. Zoom Video Communications increased 0.6% after the video conferencing services company raised its earnings outlook.

Later Tuesday, Fed Chairman Jerome Powell will make remarks at an economic summit in Las Vegas. Investors will look for new clues about his outlook for inflation, the economy and the path to interest rate hikes.

Earlier Tuesday, the computer company S&P Global said that their Purchasing Managers’ Index for the eurozone’s services and manufacturing sectors fell in May from the previous month. Factories in Europe and Japan reported a weakening of new orders due to higher costs and prices, a sign that production in the industry will decline further in the coming months.

Tuesday’s sale of technology stocks sent investors scooping up government bonds, with the yield on the 10-year US government bond falling to 2.819%, from 2.857% on Monday. Interest rates fall when bond prices rise.

Gold, considered another haven, rose 0.3% to $ 1,853.70 per troy ounce.

Brent Oil, the international oil reference, rose 0.2% to $ 113.66 a barrel, reversing losses from earlier in the session.

“You’ve got this push and pull with oil prices – oil prices are being kept down somewhat by global growth, which is not a big impact on the health of the global economy,” Streeter said. “But at the same time, it is no longer declining due to concerns about tight supply.”

In Europe, the pan-continental Stoxx Europe 600 lost 0.6%. In Asia, Hong Kong’s Hang Seng fell 1.7 percent. Japan’s Nikkei 225 lost 0.9% while China’s Shanghai Composite fell 2.4%.

Write to Caitlin McCabe at caitlin.mccabe@wsj.com