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Facebook's Plunge Hits Nasdaq as Trade Optimism Lifts Dow

Facebook's Plunge Hits Nasdaq as Trade Optimism Lifts Dow
(Daniel-Kaeslerdreamstime)

Thursday, 26 July 2018 04:50 PM

A plunge in Facebook’s shares pushed the Nasdaq down more than 1 percent on Thursday, the index’s biggest one-day drop in a month, but industrial stocks rose after the United States and the European Union said they would negotiate on trade.

Facebook shares dived 19.0 percent, their biggest ever one-day percentage drop, after the social media giant forecast years of lower profit margins. The decline in Facebook shares weighed on the S&P 500 technology index, which dropped 1.6 percent.

Shares of Amazon.com (AMZN.O), another member of the so-called FANG group of momentum stocks, fell 3.0 percent and were the second-biggest drag on the Nasdaq and S&P after Facebook. In after-hours trading, they were modestly positive in volatile trading following the company’s quarterly results.

Shares of Twitter (TWTR.N), scheduled to report its quarterly results on Friday, slid 2.9 percent.

But while the Nasdaq and the S&P 500 slumped, the Dow rose, in part on the strength of industrial stocks. Industrials, which have been a bellwether of trade tensions, were lifted after U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed to work to resolve U.S. tariffs on steel and aluminum and Europe’s retaliatory duties.

S&P 500 energy stocks also advanced, ending the session up 1.0 percent, as oil prices rose on the disruption of some of Saudi Arabia’s oil shipments.

“What we’re seeing is the market broadening out, which is healthy,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. “We need to see a rotation take place when the leadership is under pressure, and the high-flying tech names have been in the leadership position.”

The Dow Jones Industrial Average rose 112.97 points, or 0.44 percent, to 25,527.07, the S&P 500 lost 8.63 points, or 0.30 percent, to 2,837.44 and the Nasdaq Composite dropped 80.05 points, or 1.01 percent, to 7,852.19.

Another drag on the S&P and Nasdaq was Biogen (BIIB.O), whose shares tumbled 10.2 percent as trial data from its Alzheimer’s drug failed to impress investors.

McDonald’s (MCD.N) shares dipped 1.7 percent after the fast-food chain missed U.S. same-store sales estimates for the first time in at least two years.

Chipmakers, however, were a bright spot amid Thursday’s declines. The Philadelphia SE Semiconductor Index rose 1.9 percent.

Shares of Advanced Micro Devices (AMD.O) jumped 14.3 percent and Xilinx shares (XLNX.O) climbed 9.6 percent after both companies reported robust quarterly results.

Shares of Qualcomm Inc (QCOM.O) gained 7.0 percent after the chipmaker pulled its $44 billion bid for NXP Semiconductors NV (NXPI.O) upon failing to win Chinese regulatory approval. NXP shares dropped 5.7 percent.

Supervalu (SVU.N) shares surged 65.4 percent after United Natural Foods (UNFI.O) agreed to buy the supermarket operator in a $2.9 billion deal. United Natural Foods shares sank 16.3 percent, however.

Advancing issues outnumbered declining ones on the NYSE by a 1.33-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored advancers.

The S&P 500 posted 52 new 52-week highs and five new lows; the Nasdaq Composite recorded 112 new highs and 73 new lows.

Volume on U.S. exchanges was 7.05 billion shares, compared with the 6.06 billion-share average for the full session over the last 20 trading days.

© 2019 Thomson/Reuters. All rights reserved.

   
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Facebook’s slump set the Nasdaq on pace for its biggest drop in a month, but industrial stocks rose after the United States and the European Union said they would negotiate on trade.
nasdaq, stocks, dow, wall street, facebook
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2018-50-26
Thursday, 26 July 2018 04:50 PM
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