Facebook-led tech slump eclipses U.S. stocks’ broader gains
A plunge in Facebook shares weighed on U.S. stocks Thursday, erasing more than $100 billion of the social media giant’s market value and snapping a three-day winning streak for the Standard & Poor’s 500 index.
Facebook’s tumble led a sell-off in technology companies that offset solid gains in other areas of the market, including industrial and energy firms and consumer goods companies. Small-company stocks did better than the rest of the market.
The broader gains reflect another round of strong company earnings and fresh optimism among investors that trade tensions between the United States and European Union may be on the mend.
“It’s a shock what happened to Facebook, but that little improvement in the trade picture and the continuation of the earnings results have just been spectacular,” said Ted Theodore, portfolio manager at TrimTabs Asset Management.
The S&P 500 index fell 8.63 points, or 0.3%, to 2,837.44. The Dow Jones industrial average climbed 112.97 points, or 0.4%, to 25,527.07. The Nasdaq composite index sank 80.05 points, or 1%, to 7,852.18.
The Russell 2000 index of smaller-company stocks climbed 10.16 points, or 0.6%, to 1,695.36. More stocks rose than fell on the New York Stock Exchange.
The S&P 500, the market’s benchmark index, is still on track for its fourth weekly gain in a row.
Facebook sank 19% to $176.26 after the social media giant said that its user base and revenue grew more slowly than expected in the second quarter, and that it expects slower revenue growth ahead. The slower growth came about as Facebook grappled with privacy scandals. All told, $119 billion of its value was wiped out, more than the entire value of General Electric.
“For such a big company to suffer such a significant decrease in price is really amazing to watch,” said Erik Davidson, chief investment officer at Wells Fargo Private Bank.
Investors have been focused on the mostly favorable run of company quarterly earnings the last couple of weeks. At the same time, traders have been wary of global trade tensions, which have ratcheted up in recent weeks as the United States and some of its trading partners imposed tariffs and threatened more.
But talks held Wednesday between President Trump and a European Union delegation gave markets cause for encouragement after both sides agreed to work on a pact to dismantle trade barriers.
Facebook wasn’t the only big company to report disappointing quarterly results or outlooks.
Ford slid 6% to $9.89 after the automaker disclosed a sharp drop in quarterly profit and said it would undertake a restructuring that will cost $11 billion over the next three to five years.
Mattel slumped 4.2% to $15.61 after the maker of Barbie and Hot Wheels reported a loss that was larger than analysts were expecting and said it would eliminate more than 2,200 jobs.
Reports from other companies put investors in a buying mood.
D.R. Horton jumped 10.9% to $43.84 after the home builder reported earnings and revenue that easily beat Wall Street’s forecasts and announced a $400-million share repurchase program.
Qualcomm vaulted 7% to $63.58 after the chipmaker reported earnings that beat analysts’ expectations and said it would abandon its bid to acquire NXP Semiconductors.
Mondelez International, which sells Oreo cookies and Cadbury chocolate, climbed 4.3% to $43.27 after posting earnings and revenue that topped analyst estimates. Traders also bid up shares in rival Hershey, which jumped 7.4% to $99.66.
Several airlines also traded higher, contributing to industrial sector gains. Alaska Air Group surged 9.6% to $64.76. Southwest Airlines jumped 8.4% to $56.70. American Airlines advanced 4.8% to $40.02.
Benchmark U.S. crude rose 31 cents to $69.61 a barrel. Brent crude, used to price international oils, rose 61 cents to $74.54 a barrel.
The rise in oil prices gave a boost to some energy stocks. Marathon Petroleum climbed 7.3% to $80.16.
Bond prices fell, sending yields higher. The yield on the 10-year Treasury rose to 2.98% from 2.97%.
In other energy futures trading, heating oil rose 3 cents to $2.18 a gallon. Wholesale gasoline rose 4 cents to $2.16 a gallon. Natural gas rose 1 cent to $2.78 per 1,000 cubic feet.
The dollar rose to 111.23 yen from 110.83 yen. The euro weakened to $1.1645 from $1.1699.
Gold fell $6.10 to $1,225.70 an ounce. Silver fell 9 cents to $15.50 an ounce. Copper was little changed at $2.82 a pound.
Major stock indexes in Europe rose. Germany’s DAX jumped 1.8%. France’s CAC 40 gained 1%. Britain’s FTSE 100 edged down 0.1%. In Asia, Japan’s Nikkei 225 slipped 0.1%, South Korea’s Kospi advanced 0.7%, and Hong Kong’s Hang Seng lost 0.5%.
3 p.m.: This article was updated with closing prices, context and analyst comment.
This article was originally published at 7:05 a.m.
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