Facebook rattles Nasdaq, but trade optimism boosts Dow
Reuters
Published Jul 26, 2018 12:10PM ET
Facebook rattles Nasdaq, but trade optimism boosts Dow
By Amy Caren Daniel
(Reuters) - Facebook's plunge sparked a selloff in high-growth stocks that sent the Nasdaq lower on Thursday, but the contagion was contained by optimism after the United States and the European Union said they would negotiate on trade.
Facebook (O:FB) shares dived 18.6 percent, set for its biggest one-day percentage drop ever, after the social media giant said profit margins would plummet for years due to costs to improve privacy safeguards and slowing usage in its big advertising markets.
"It brings up concerns for other companies in that space and throws them into the limelight on whether they are protecting their users and using right security software," said Daniel Morgan, portfolio manager at Synovus Trust in Atlanta.
Other high-flying stocks were also lower. Netflix (O:NFLX) declined 0.6 percent, Alphabet (O:GOOGL) dropped 0.3 percent. Amazon.com (O:AMZN), due to report results after the bell, fell 1.9 percent. Twitter (N:TWTR), scheduled to report on Friday, slid 3 percent.
The tech sector (SPLRCT) retreated 1.41 percent. But the other 10 major S&P sectors were higher, with industrials keeping the Dow Jones Industrial Average firmly in positive territory. The benchmark S&P 500 was flat.
Industrials and trade-sensitive stock gained after President Donald Trump and the European Commission chief agreed to tackle their transatlantic trade row, seeking to "resolve" U.S. tariffs on steel and aluminum and Europe's retaliatory duties.
Strong earnings reports have also lifted sentiment.
Earnings of S&P 500 companies is now expected to have rise 22.4 percent in the second quarter, compared with an estimate of 20.7 percent as of July 1, according to Thomson Reuters I/B/E/S.
At 11:31 a.m. ET, the Dow Jones Industrial Average (DJI) was up 130.18 points, or 0.51 percent, at 25,544.28, while the S&P 500 (SPX) was down 4.16 points, or 0.15 percent, at 2,841.91. The Nasdaq Composite (IXIC) was down 54.87 points, or 0.69 percent, at 7,877.37.
Chipmakers were a bright spot in the technology stocks carnage.
Advanced Micro Devices (O:AMD) jumped 13 percent, while Xilinx (O:XLNX) rose 10.2 percent after robust quarterly reports.
Qualcomm (O:QCOM) gained 4.9 percent after pulling its $44-billion bid for NXP Semiconductors (O:NXPI) as it failed to win Chinese regulatory approval. NXP dropped 7.8 percent.
McDonald's (N:MCD) dipped 2.4 percent after the fast-food chain missed U.S. same-store sales estimates for the first time in at least two years.
Another drag on the Nasdaq was Biogen (O:BIIB), which tumbled 9.1 percent as trial data on its Alzheimer's drug failed to impress investors.
Get The News You Want
Supervalu (N:SVU) surged 64.5 percent after United Natural Foods (O:UNFI) agreed to buy the supermarket operator in a $2.9 billion deal. United Natural slipped 14.1 percent.
Advancing issues outnumbered decliners by a 1.91-to-1 ratio on the NYSE and a 1.72-to-1 ratio on the Nasdaq.
The S&P index recorded 51 new 52-week highs and four new lows, while the Nasdaq recorded 98 new highs and 46 new lows.
Written By: Reuters
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.