Traders work on the floor of the New York Stock Exchange (NYSE)
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- US stocks plunged after a big earnings miss for Facebook parent Meta Platforms sparked a wider tech rout.
- Other social media stocks sold off as did stocks with exposure to the metaverse.
- Tech bellwethers PayPal and Spotify have also slipped this week on disappointing guidance.
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US stocks plunged after a big earnings miss for Facebook parent Meta Platforms sparked a wider technology rout led by the Nasdaq.
Meta stock sank as much as 26% — marking its biggest one-day drop and wiping out $200 billion in market value — after weak fourth-quarter earnings showed daily users fell for the first time ever. Other social media stocks sold off, as did stocks with exposure to the metaverse.
In addition to Meta, tech bellwethers PayPal and Spotify also slipped this week on disappointing guidance. Ahead, investors are bracing themselves for earnings from Amazon, Ford, and Snap, as well as 110 other companies.
Here’s where US indexes stood shortly after 4:00 pm ET close on Thursday:
- S&P 500: 4,477.41, down 2.44%
- Dow Jones Industrial Average: 35,111.16, down 1.45% (518.17 points)
- Nasdaq Composite: 13,878.82, down 3.74%
US equities were initially battered to start the year amid a more hawkish Federal Reserve determined to raise interest rates as early as March to curb surging inflation. Tech companies, in particular, have been struggling to justify their lofty valuations and have been seeing wild swings.
But before Meta reported on Wednesday, equities were enjoying a short breather driven by a streak of strong earnings that began with Apple and Microsoft. Heading into Thursday’s session, the benchmark S&P 500 had notched a four-day rally, its biggest gain since November 2020.
“The tech rebound is officially over,” Edward Moya, senior equity analyst of Oanda, said in a note Thursday. “Technology stocks are going to struggle as confidence fades that the middle-of-pack companies will be able to navigate persistently high inflation, surging borrowing costs, and intensifying margin pressures.”
Spotify tumbled 19% following a soft outlook on user growth that threw the spotlight off the streaming company’s strong fourth-quarter results. PayPal extended its losses by falling 6% Thursday after reporting guidance that caused its stock to sink to a 21-month low in the previous session.
Chris Beauchamp, chief market analyst at IG, said stocks that boomed during the pandemic may be proving their lack of long-term reliability to shareholders.
“The problem with these growth names is that people forget that the price paid for big gains is the potential for big losses,” he said in a note Thursday. “These stocks live or die by the expectations of growth that surround them – so long as they can show that then all is good, but as both Netflix and Peloton showed last week, the market is very intolerant of high flyers that falter.”
Ahead of tax season in the US, Coinbase said it is giving users the option to receive their tax refunds in cryptocurrency if they file using TurboTax through its direct deposit program.
Social media platform Stocktwits is launching a live trading feature amid the boom in retail investing. And first on its list of assets to be offered are cryptos, in partnership with FTX.
Oil prices jumped to their highest since 2014 as supply remains limited while demand surges. West Texas Intermediate crude oil rose as much as 2.11% to $90.12 per barrel. Brent crude, oil’s international benchmark, gained 1.74% to $91.03 per barrel.
Gold fell 0.11% to $1,805.90 per ounce. The 10-year Treasury yield rose to 1.823% from 1.765%. Bond yields move inversely to prices.