A man reads tweets on his phone in front of a Twitter logo. (File Photo).Regis Duvignau/Reuters
Technology companies led a slide in U.S. stocks Friday, adding to the market’s losses from another tech-driven sell-off a day earlier.
Twitter plunged more than 20 per cent, its second-biggest loss since going public in 2013, after the social media network said its monthly users declined in the second quarter.
While technology stocks made up much of the market’s drop, smaller-company stocks fell more than the rest of the market. The losses outweighed gains in banks and phone companies.
Even so, the S&P 500, the market’s benchmark index, had its fourth weekly gain in a row.
The week ended largely as it began, with investors focused on a cavalcade of company earnings reports, most of which have topped Wall Street’s forecasts.
“There were clearly high expectations coming into second-quarter earnings and we’ve seen where companies have performed well relative to those expectations, they’ve typically been rewarded, and where they have fallen short of those expectations, either in current quarter or future guidance, is where you’re seeing (selling) occur,” said Bill Northey, senior vice-president at U.S. Bank Wealth Management.
The S&P 500 index fell 18.62 points, or 0.7 per cent, to 2,818.82. The Dow Jones Industrial Average slid 76.01 points, or 0.3 per cent, to 25,451.06. The Nasdaq composite index, which is heavily weighted with technology companies, lost 114.77 points, or 1.5 per cent, to 7,737.42. The Russell 2000 index of smaller-company stocks gave up 32.02 points, or 1.9 per cent, to 1,663.34.
This was the busiest stretch of the second-quarter earnings season, with roughly a third of companies in the S&P 500 reporting results. While some companies posted results that fell short of analysts’ forecasts, most delivered better-than-expected results and favourable outlooks.
Of the 49 per cent of the companies in the S&P 500 that had issued quarterly results as of Friday, some 65 per cent reported earnings and revenue that beat analysts’ forecasts, according to S&P Global Market Intelligence.
That’s reinforced the underlying perception in the financial markets that the U.S. economy is performing strongly and that the Federal Reserve will raise interest rates again next week.
The government said Friday that the U.S. economy surged in the April-June quarter to an annual growth rate of 4.1 per cent. That’s the fastest pace since 2014, driven by consumers who began spending their tax cuts and exporters who rushed to get their products delivered ahead of retaliatory tariffs.
The economic snapshot had been widely expected, so it didn’t have a noticeable impact on the market or the sell-off in technology stocks.
For the second straight day a social media company led a steep decline in the technology sector. Twitter plummeted 20.5 per cent to $34.12 after the company disclosed user totals and a forecast that disappointed investors.
Snap, the company behind the Snapchat messaging app, slid 4 per cent to $12.83. Facebook shares gave up 0.8 per cent to $174.89 a day after the social media giant led a slide in technology stocks that snapped the S&P 500’s three-day winning streak.
Facebook’s steep drop, which erased nearly $120 billion of the company’s market value, was brought on by its warning to investors that it sees slower revenue growth ahead. With Friday’s losses, Facebook shares came within a hair’s length of finishing in a bear market, which is defined as a drop of 20 per cent from a recent peak.
Other technology companies also had a rough day.
Intel skidded 8.6 per cent to $47.68 after the chipmaker’s latest quarterly report left analysts concerned about the company’s profit margins and key businesses.
Computer hard drive companies contributed to the technology sector losses. Western Digital lost 7.7 per cent to $71.13, while Seagate Technology slid 5 per cent to $54.69.
CBS dropped 6.1 per cent to $54.01, the biggest one-day loss for the stock in more than six years, following reports of sexual misconduct allegations against its CEO, Les Moonves.
Investors bid up shares in companies that reported solid quarterly results.
Expedia Group surged 9.5 per cent to $137.79 after the online travel portal’s quarterly earnings topped analysts’ forecasts. Chipotle Mexican Grill climbed 5.7 per cent to $472.30 after the restaurant chain said sales online and at established stores improved in its latest quarter.
Amazon.com rose 0.5 per cent to $1,817.27 after the online retailer reported its biggest profit ever as its advertising and cloud computing businesses kept growing.
Benchmark U.S. crude lost 92 cents, or 1.3 per cent, to settle at $68.69 per barrel in New York. Brent crude, used to price international oils, fell 25 cents to close at $74.29.
Bond prices rose, sending yields lower. The yield on the 10-year Treasury fell to 2.96 per cent from 2.97 per cent late Thursday.
The dollar slipped to 111 yen from 111.23 yen on Thursday. The euro strengthened to $1.1656 from $1.1645.
Gold lost $2.70 to $1,223 an ounce. Silver was little changed at $15.49 an ounce. Copper fell 2 cents to $2.80 a pound.
In other energy futures trading, heating oil slid 2 cents to $2.16 a gallon. Wholesale gasoline was little changed at $2.16 a gallon. Natural gas added 4 cents to $2.82 per 1,000 cubic feet.
Major indexes in Europe finished higher. Germany’s DAX added 0.4 per cent and the CAC 40 in France gained 0.6 per cent. Britain’s FTSE 100 picked up 0.5 per cent. In Asia, Japan’s Nikkei 225 index rose 0.6 per cent. The Kospi in South Korea picked up 0.3 per cent. Hong Kong’s Hang Seng index edged 0.1 per cent lower.