Nasdaq ends 3.7% lower as US stocks drop on weak earnings
A view of the exterior of the Nasdaq market site in the Manhattan borough of New York City, U.S., October 24, 2016. (REUTERS/File Photo)
NEW YORK – The Nasdaq plunged more than three percent Thursday following weak earnings from Facebook parent Meta as stocks resumed their downward shift amid worries over tightening monetary policy.
All three major indices finished with losses, snapping a four-day winning streak, with the Nasdaq falling 3.7 percent to 13,878.82.
The Dow Jones Industrial Average dropped 1.5 percent to 35,111.16, while the broad-based S&P 500 shed 2.4 percent to 4,477.44.
Thursday’s session shows that rallies are “fragile,” said Liz Young, head of investment strategy at SoFi.
“The reason that it’s fragile is because we are going into a tightening cycle. And things like earnings are going to be scrutinized that much more closely.”
Meta late Wednesday had reported weaker-than-expected profits following a loss of one million daily users globally on its signature social media platform.
Shares finished 26.4 percent lower, but Meta wasn’t the only company to be punished after disappointing results.
Spotify Technology sank 16.8 percent as it issued a lackluster forecast while facing questions over its handling of podcaster Joe Rogan’s comments discouraging Covid-19 vaccines.
Dow members Honeywell International and Merck dropped 7.6 percent and 3.7 percent after results.
Also weighing on markets Thursday was the latest sign that central banks were ready to sharply pivot their policies to counter rising inflation.
The Bank of England lifted its main interest rate for the second time in a row, while European Central Bank chief Christine Lagarde opened the door to rate hikes later this year.
“The central bank factor was in play today as another negative on top of the Facebook news,” said Briefing.com analyst Patrick O’Hare.
“What it has done has redirect peoples’ attention back to idea that policy tightening is going to be a headwind for the market for this year.”
