Nasdaq slumps as Facebook suffers biggest one-day drop ever

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                         Investors are giving a thumbs down to Facebook’s quarterly report.

U.S. stocks mostly fell on Thursday, with technology stocks leading the Nasdaq sharply lower as Facebook shares plummeted in their biggest one-day drop ever following disappointing quarterly results.

Facebook, due to its size and weight in the market, cast a negative light on the session, which was otherwise largely strong. Seven of the 11 primary industry groups rose on the day, which put the Dow into positive territory and limited declines in the S&P 500.

What are the main benchmarks doing?

The Dow Jones Industrial Average DJIA, +0.61%rose 157 points, or 0.6%, to 25,570. The blue-chip average doesn’t count Facebook among its 30 components.

The S&P 500 SPX, -0.13%fell 8 points, or 0.3%, to 2,837. Tech stocks were by far the biggest decliners of the day, off 2%. The Nasdaq Composite Index COMP, -0.81%sank 97 points to 7,836, a decline of 1.2% from a record close.

What’s driving markets?

Facebook FB, -19.34%dropped 19% a day after the company late Wednesday revealed lower-than-expected quarterly revenue, slowing user growth and weak guidance. At its current level, the stock was on track for its biggest one-day drop in its history. 

Other social media stocks fell, withTwitter IncTWTR, -3.03% down 4.3% and Snap Inc.SNAP, -2.20% losing 4.4%. The Global X Social Media ETF SOCL, -3.50% was off 4%.

The social-media giant has been among the tech giants powering the stock market’s gainsthis year. Other so-called FAANG stocks—which refers to the quintet of large-capitalization technology and internet stocks, a group that many analysts frequently warn is overvalued— also trended lower, with Netflix IncNFLX, -0.21% down 1.4% and Google-parent Alphabet IncGOOG, -0.33%GOOGL, -0.27%down 0.7%.

Outside of Facebook-related gloom, the second-quarter earnings season continued to roll on, with a number of major companies reporting better-than-expected results, providing an underpinning of support to markets.

In addition, investors cheered Wednesday’s upbeat meeting between Trump and the European Commission’s president. The two leaders reached a trade agreement that has been called short on specifics, but still significant.


Why small and mid-caps could be the answer to trade-related jitters


Separately, European Central Bank left interest rates unchanged and affirmed its plan to end its monthly bond-buying program in December, as had been expected. In addition, ECB President Mario Draghi said that uncertainty around the inflation outlook was receding. 

What are strategists saying?

“I’m not surprised to see a decline like this in Facebook, especially since even with this drop its still up year-over-year. As a growth investor looking for sustainable competitive advantages, I’m identifying cracks in Facebook’s business model. It’s new users are going to come from emerging markets, for the most part, which generate a lower revenue per user. That means the revenue growth will slow over time, and that margins will compress,” said Brian Milligan, portfolio manager of the Ave Maria Growth Fund.

“Beyond the FAANGs, things look pretty good right now, not withstanding the trade rhetoric, which seems to change every hour. There’s good growth, but trade obviously creates uncertainty, and that’s the risk. How much uncertainty is out there and how much are investors willing to bear?”

Which other stocks are in focus?

Comcast CorpCMCSA, +3.55% reported adjusted second-quarter earnings that came in ahead of forecasts, but lower-than-expected revenue. Shares rose 3.2%.

Advanced Micro Devices IncAMD, +9.78% climbed 6.4% after the chip maker reported revenue that grew more than expected.

Celgene CorpCELG, +0.86% dipped 0.1% after it reported positive resultsfrom a phase 3 cancer trial after-hours the previous day.

MasterCard IncMA, -3.62%fell 3.8% after reporting its results.

ConocoPhillips COP, -0.69% posted adjusted second-quarter earnings that beat expectations. Shares lost 0.9%.

Raytheon CoRTN, -3.39% slid 5% after the defense company reported second-quarter earnings and revenue that beat expectations.

Dunkin’ Brands Group IncDNKN, +0.03% reported adjusted second-quarter earnings that beat analyst forecasts, but it lowered its outlook. Shares were flat.

Under Armour Inc.UA, +2.33% popped 1.9% after it posted stronger-than-expected second-quarter revenue.

PayPal Holdings Inc. PYPL, -4.20% gave a third-quarter outlook that missed expectations. Shares fell 3%.

Hershey CoHSY, +5.34% jumped 5.6% after it reported adjusted second-quarter earnings that beat expectations.

Supervalu IncSVU, +64.16% surged 65% after United Natural Foods IncUNFI, -13.78% said it would buy the company for about $2.9 billion. Shares of United lost 14%.

Which economic reports are in focus?

Initial jobless claims climbed more than expected in the latest week, though they remain near a multidecade low

Durable-goods orders rose 1% in June, the first increase in three months. Economists surveyed by MarketWatch had forecast a 3.8% gain in orders for durable goods.

The U.S. trade deficit in goods widened to $68.3 billion in June, up 5.5% or $3.6 billion, according to the Commerce Department’s advanced estimate released Thursday.

Check out:MarketWatch’s Economic Calendar

What are other markets doing?

European stocksSXXP, +0.63%traded higher after the U.S.-EU trade truce, while Asian markets finished mixed.

Gold futures GCQ8, -0.42%and oil futures CLU8, +0.13%were lower, as the ICE U.S. Dollar Index DXY, +0.47%also lost ground.