U.S. stocks fell on Thursday as investors’ renewed optimism on big tech names, driven by a slew of strong earnings, took a turn down after Facebook parent Meta Platforms reported disappointing quarterly results.
The Nasdaq Composite dropped 1.6%, and the S&P 500 slid 1.2% with tech shares as the biggest drag by far. The Dow Jones Industrial Average fell 304 points, or 0.8%.
“We could get another opportunity this afternoon to change the narrative once more,” said JJ Kinahan, chief market strategist at TD Ameritrade, referencing Amazon’s earnings after the bell. “The question right now is, is this a Meta specific issue, or is this going to be an overall issue?”
Meta Platforms shares plunged more than 25% after the company’s quarterly profit fell short of expectations. The company also issued weaker-than-expected revenue guidance for the current quarter. It was the biggest drop ever for the Facebook-parent.
Thursday’s declines come after the major averages notched a four-day win streak during the regular session Wednesday, led by Google parent Alphabet. Investors bought the dip in tech stocks after shedding their positions throughout January as they braced for potential rate hikes from the Federal Reserve.
Strong earnings from Microsoft, Apple and Alphabet drove investors back into tech, reminding them that fundamentals are still strong, but Meta Platforms’ weak guidance has caused some to reverse course.
“The problem that we’re suffering from right now is that it’s not enough to have good earnings, you have to lay out a really good plan going forward with a lot of optimism. ‘Good isn’t good enough’ is really the theme of this earnings season so far,” Kinahan.
“In the past, if you bought a dip you’d be fine,” he added. “Now, it’s a little bit more of ‘well show me that if I buy the dip I can be okay.”
Other social media names, including Snap and Twitter, followed Facebook shares lower on Thursday. Snap shares slid 18%, and Twitter dropped about 6%.
Spotify Technology, meanwhile, fell 12% after the company’s latest quarterly figures showed a slowdown in premium subscriber growth. Amazon, which will report after the closing bell, fell 4%.
Outside of tech, Dow component Honeywell’s shares fell 4.8% after the company beat narrowly on profit but fell short on revenue and provided lower-than-expected guidance.
On the economic data front, U.S. jobless claims came in at 238,000 for the week ending Jan. 29, the Labor Department reported Thursday. Economists polled by Dow Jones expect initial claims to have fallen to 245,000 from 260,000 the week before.
Those numbers followed the release of ADP’s surprisingly downbeat private payrolls data Wednesday. Investors are still looking forward to Friday’s release of nonfarm payrolls data. Consensus estimates see a gain of 150,000 jobs, according to Dow Jones, but Wall Street forecasters say the actual tally will be far lower, with one estimating a loss of 400,000 jobs in…
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