Market Snapshot: Nasdaq Composite sinks as Facebook parent’s stock gets clobbered, down over 20%


U.S. stock indexes on Thursday headed sharply lower, putting in jeopardy a four-day win streak, pressured by the weak outlook from Meta Platforms, the parent of social-media giant Facebook Inc.

Investors also were digesting a series of policy updates from the Bank of England and the European Central Bank, and weekly U.S. data on employment and business activity.

How are stock benchmarks trading?
  • The Dow Jones Industrial Average DJIA, -0.58% fell 164 points, or 0.5%, to 35,454.
  • The S&P 500 index SPX, -1.10% dropped 1.4%, or 65 points, to 4,524.
  • The Nasdaq Composite Index COMP, -1.80% slumped 2.3%, or 327 points, to 14,090, with Facebook the biggest drag on the market-cap weighted index.

On Wednesday, the Dow rose 224 points, or 0.63%, to 35629, the S&P 500 increased 43 points, or 0.94%, to 4589, and the Nasdaq Composite gained 72 points, or 0.5%, to 14418. All three indexes have gained ground over the prior four sessions, with the Nasdaq surging 8% over that time span.

What’s driving markets

Meta Platforms FB, -23.41% traded 19% lower in premarket action, as the Facebook parent not only missed sales and growth estimates for the fourth quarter but warned inflation and competition from the likes of TikTok would weigh on first-quarter results.

“Disappointing earnings and an uncertain outlook for Meta, the firm behind names such as Facebook and Instagram, darkened the mood in the markets, generating some anxiety over the tech sector as a whole,” said Ricardo Evangelista, senior analyst at ActivTrades.

There is a busy slate on the U.S. economics calendar, with data including the latest reports on jobless claims and the services sector, a confirmation hearing for a trio of Federal Reserve nominees and interest-rate decisions coming from the Bank of England and the European Central Bank.

The Bank of England raised its key interest rate from 0.25% to 0.5%, justifying the move by citing rising inflation and the tight conditions of the U.K. labor market. The decision marked the first back-to-back rate increases for the BOE since 2004.

That decision came ahead of a decision by The European Central Bank, as expected, made no changes to monetary policy on Thursday and “confirmed” a plan to wind down its Pandemic Emergency Purchase Program, or PEPP, laid out in December. 

ECB President Christine Lagarde has previously called a 2022 rate increase unlikely. She was hosting a news conference at 2:30 p.m. Frankfurt time, or 8:30 a.m. Eastern, where she said that Europe’s economy continues to recover, but growth is likely to be subdued in the first three months of 2022.

In economic reports, U.S. jobless claims dropped 23,000 to 238,000 on the week as omicron receded, data show. Meanwhile, unit labor costs rose at a 0.3% rate in the fourth quarter of 2021, data show.

Looking ahead, IHS Markit will release composite and services purchasing managers index readings for January at 9:45 a.m. Eastern Time, while the closely watched Institute for Supply Management’s January services PMIs is due at10 a.m. At the same time is a reading on factory orders for December.

Which companies are in focus?
  • Snapchat parent Snap Inc. SNAP and Pinterest PINS both saw pressure after the Meta Platforms results, with both companies due to report results after the close. Shares of Snap were down 19%, and those for Pinterest were off nearly 11%.
  • Spotify Technology SPOT also reeled after issuing a light subscription forecast. Its stock was down almost 11%.
  • AMZN will be the last of the megacap tech giants to report results after the close of trading. Shares of the company were down over 5%.
How are other assets faring?
  • The yield on the 10-year Treasury note TMUBMUSD10Y rose about 6.3 basis points to around 1.83%. Yields and debt prices move opposite each other.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was down 0.3%, as the British pound GBPUSD, +0.23% and euro EURUSD, +0.98% rose following the decision from the Bank of England and an update from the ECB.
  • West Texas Intermediate crude for March delivery CLH22 fell 0.7%, to trade at $87.66 a barrel. Gold’s April futures contract GCJ22 declined 0.4% at $1,803 an ounce.
  • Bitcoin BTCUSD was trading off about 2.6%, at around $36,535.
  • In European equities, the Stoxx Europe 600 SXXP traded 1.4% higher, while London’s FTSE 100 UKX UKX was trading 0.3% lower.
  • The Nikkei 225 NIK NIK closed down 1.1% and Korea’s Kospi Index 180721, +1.67% rose 1.7%. Markets in China and in other parts of Asia are closed for Lunar New Year.

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