The stock market fell on Thursday—its first down day in five sessions—as investors once again dumped shares of tech stocks, which were under pressure after Facebook-parent Meta Platforms reported lackluster profits and warned of challenges to its business this year.
The Key Facts
The Dow Jones Industrial Average fell 0.8%, nearly 300 points, while the S&P 500 lost 1.3% and the tech-heavy Nasdaq Composite plunged nearly 2%.
Tech stocks led the market lower on Thursday: Despite a recent comeback after a big sell-off in January, investors’ renewed optimism in tech stocks took a sharp downturn following Meta’s massive earnings miss.
Company issued lower than expected guidance on revenue, warning of rising competition, slower user growth, and continuing challenges due to the Apple iOS advertising changes.
Shares of Facebook-parent Meta are on pace for their biggest one-day drop ever, falling 25% and erasing over $200 billion in market value alone, with the company’s market capitalization now standing at around $675 billion.
Social media stocks were particularly hard-hit following Meta’s big earnings miss: Shares of Snap, formerly known as Snapchat, plunged 20%, while image sharing platform Pinterest lost over 8% and social media platform Twitter fell 7%.
Other Big Tech Companies also saw shares fall, such as Amazon (down 5%), Apple (1%) and Microsoft (22%).
Strong earnings from the likes of Alphabet, Apple and Microsoft helped push investors back into tech stocks after January’s sell-off when the Nasdaq fell into correction territory, down 9% for the month alone. That renewed optimism in recent days has proved short-lived, however, with investors once again dumping tech shares after Meta’s dismal quarterly earnings report late on Wednesday.
The most important quote:
“This isn’t simply a disappointing quarter but rather an existential moment for Meta where investors will be forced to take a long and hard look at the company’s competitive position and consider whether it isn’t heading into a prolonged period of subpar performance – this will make it hard for the stock to quickly rebound,” predicts Vital Knowledge founder Adam Crisafulli.
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