Wall St plunges as Snap's bleak forecast sparks selloff

(For a Reuters live blog on U.S., UK and European stock markets, click LIVE/ or type LIVE/ in a news window)

* Snap set for worst day on record after profit warning

* Abercrombie & Fitch slumps after lowering revenue outlook

* Indexes down: Dow 0.77%, S&P 1.77%, Nasdaq 3.26% (Updates to open)

By Devik Jain and Anisha Sircar

May 24 (Reuters) - Wall Street's main indexes fell on Tuesday, with the tech-heavy Nasdaq leading the slump, as a weak earnings forecast from Snapchat-owner Snap Inc added to nerves about an inflation-struck economy.

Snap Inc SNAP.N plummeted 39.7%, dragging down several social media and internet stocks, after the company slashed its second-quarter earnings forecast and said the economy had worsened faster than expected in the last month.

The stock was set for its worst single-day drop.

Twitter Inc TWTR.N , Google-owner Alphabet Inc GOOGL.O , Meta Platforms Inc FB.O and Pinterest Inc PINS.N , which rely heavily on advertising revenue, fell between 3.0% and 24.8%.

"Snap is a proxy for online advertising and when you see weakness there then you automatically think Facebook, Pinterest and Google," Dennis Dick, a trader at Bright Trading LLC in Las Vegas, said.

"The back half of the earnings season has seen major disappointments. Expectations are a lot lower, but these companies seem to be finding a way to even get under the lower bar."

Nine of the 11 major S&P sectors declined in morning trade after rising broadly in the previous session. The communication services sector .SPLRCL slid 5.2%.

Wall Street rebounded on Monday from a steep selloff last week that saw both the S&P 500 .SPX and the Nasdaq .IXIC mark their longest streak of weekly declines since the dotcom bust in 2001 on mounting concerns about a recession.

Data showed U.S. business activity slowed moderately in May as higher prices cooled demand for services, while renewed supply constraints because of COVID-19 lockdowns in China and the ongoing conflict in Ukraine hampered production at factories.

"Yesterday's rally and Friday's action suggested that the market hit a near-term bottom, but there's still a lot of negative sentiment ... (macro worries) are a big part of this decline," said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

U.S. Federal Reserve Chair Jerome Powell is scheduled to speak later in the day, with investors looking for fresh comments about the path of future interest rate hikes.

Markets are pricing in 50 basis point rate hikes by the Fed in June and July. FEDWATCH .

At 10:06 a.m. ET, the Dow Jones Industrial Average .DJI was down 246.25 points, or 0.77%, at 31,633.99, the S&P 500 .SPX was down 70.15 points, or 1.77%, at 3,903.60, and the Nasdaq Composite .IXIC was down 376.45 points, or 3.26%, at 11,158.83.

Abercrombie & Fitch Co ANF.N slumped 27.2% after the apparel retailer trimmed its annual sales and margins outlook, citing a surge in freight and raw material costs.

Zoom Video Communications Inc ZM.O inched up 0.9% after raising its full-year profit forecast on strong enterprise demand.

The CBOE volatility index .VIX , also known as Wall Street's fear gauge, rose to 29.24 points.

Declining issues outnumbered advancers for a 2.96-to-1 ratio on the NYSE and a 4.46-to-1 ratio on the Nasdaq.

The S&P index recorded two new 52-week highs and 37 new lows, while the Nasdaq recorded five new highs and 237 new lows.
Reporting by Devik Jain and Anisha Sircar in Bengaluru; Editing by Saumyadeb Chakrabarty and Shounak Dasgupta

Disclaimer: The XM Group entities provide execution-only service and access to our Online Trading Facility, permitting a person to view and/or use the content available on or via the website, is not intended to change or expand on this, nor does it change or expand on this. Such access and use are always subject to: (i) Terms and Conditions; (ii) Risk Warnings; and (iii) Full Disclaimer. Such content is therefore provided as no more than general information. Particularly, please be aware that the contents of our Online Trading Facility are neither a solicitation, nor an offer to enter any transactions on the financial markets. Trading on any financial market involves a significant level of risk to your capital.

All material published on our Online Trading Facility is intended for educational/informational purposes only, and does not contain – nor should it be considered as containing – financial, investment tax or trading advice and recommendations; or a record of our trading prices; or an offer of, or solicitation for, a transaction in any financial instruments; or unsolicited financial promotions to you.

Any third-party content, as well as content prepared by XM, such as: opinions, news, research, analyses, prices and other information or links to third-party sites contained on this website are provided on an “as-is” basis, as general market commentary, and do not constitute investment advice. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, it would be considered as marketing communication under the relevant laws and regulations. Please ensure that you have read and understood our Notification on Non-Independent Investment. Research and Risk Warning concerning the foregoing information, which can be accessed here.

We are using cookies to give you the best experience on our website. Read more or change your cookie settings.

Risk Warning: Your capital is at risk. Leveraged products may not be suitable for everyone. Please consider our Risk Disclosure.