Schwab Market Update: Markets See Pressure Amid Disappointing Data

U.S. equities are trading lower in afternoon action with the markets unable to extend yesterday's solid gains. The markets continue to face a host of headwinds, notably stubbornly high inflation pressures that have forced the Fed to begin an aggressive monetary policy tightening campaign. The economic calendar appears to be adding to the negative sentiment, as preliminary data on the domestic manufacturing and services sectors came in below estimates, new home sales plunged, and a read on regional manufacturing activity surprisingly fell into contraction territory. Meanwhile, inflation, labor costs, and supply chain issues remain evident in corporate earnings reports, with Snap falling sharply after lowering its guidance, while Best Buy posted mixed results, Abercrombie & Fitch reported an unexpected loss, and Autozone topped quarterly estimates. Treasuries are trading higher to apply downside pressure on yields, and the U.S. dollar is adding to yesterday's drop. Crude oil prices have turned lower, and gold is gaining ground. Europe finished mixed, while markets in Asia were lower with China leading the way.

As of 12:50 p.m. ET, the Dow Jones Industrial Average is down 1.0%, the S&P 500 is declining 1.9%, and the Nasdaq Composite is decreasing 3.1%. WTI crude oil is losing $0.53 at $109.76 per barrel, and Brent crude oil is decreasing $0.25 at $113.20 per barrel. The gold spot price is trading $17.40 higher to $1,865.20 per ounce, and the Dollar Index is falling 0.4% at 101.71.

Best Buy Co. Inc. (BBY $73) reported adjusted Q1 earnings-per-share (EPS) of $1.57, below the $1.59 FactSet estimate, as revenues declined 8.5% year-over-year (y/y) to $10.7 billion, north of the Street's forecast of $10.4 billion. Q1 same-store sales declined 8.0% y/y, compared to the expected 8.6% drop. The electronics and appliance retailer said results were softer than last year as it lapped stimulus and other government support that boosted unusually strong demand, while it saw increased promotional activity and higher supply chain expenses. BBY lowered its full-year EPS and sales guidance. The company noted that macro conditions worsened since early March and those trends have continued into Q2. BBY is trading modestly lower.

Snap Inc. (SNAP $13) is falling sharply after the social media company lowered its profit and revenue guidance for Q2 as it noted that the macroeconomic environment has deteriorated further and faster than anticipated. The company also said it will slow the pace of hiring.