Nasdaq slumps as Facebook, Twitter weigh on tech stocks
The Nasdaq tumbled on Wednesday, on pace for its biggest one-day drop in three weeks, as investors sold off technology stocks on concerns stemming from U.S. lawmakers grilling Twitter and Facebook executives over foreign efforts to tilt U.S. politics.
The broader market was also weighed by a drop in energy stocks as oil prices weakened and fears over the likelihood of the United States slapping new tariffs on Chinese goods as early as this week.
Twitter dropped 4.7 percent and Facebook fell 1.6 percent as their top executives defended their companies to skeptical U.S. lawmakers.
Alphabet, whose offer to send its chief legal officer to Congress rather than its chief executive officer was declined, slid 1.2 percent. Snapchat-parent Snap Inc was down 3.5 percent.
"Typically when companies testify in Congress the headlines are not going to be good, so it provides an opportunity for investors in the short term to sell and catch some profits," said Brant Houston, managing director of CIBC Private Wealth Management in Denver, Colorado.
Houston said nervousness around the likelihood of stricter regulation was also weighing on social media companies, whose stocks have been among the best performers this year.
The technology sector, the biggest gainer among the 11 S&P sectors this year, sank 1.27 percent on Wednesday. Seven of the 11 major sectors were higher, led by roughly 1 percent gains in the defensive consumer staples and utilities sectors.
"It seems the tech sell off is part of a broader rotation into more defensive sectors," said Atlantic Equities analyst James Cordwell.
"With the ongoing trade war and potential signs of stress in the Chinese economy, there are certainly factors out there to have made investors return from their vacations feeling a bit more cautious than when they went away."
With concerns over trade simmering, Commerce Department data showed that the U.S. trade deficit hit a five-month high in July, suggesting the Trump administration`s protectionist policy was so far not having an impact.
The data comes amid concerns that a U.S. proposal to slap tariffs on $200 billion more in Chinese imports could be effective as soon as a public comment period ends on Sept. 6, even as the U.S.-Canada talks to salvage the North American Free Trade Agreement continue.
At 13:07 a.m. ET the Dow Jones Industrial Average was up 11.20 points, or 0.04 percent, at 25,963.68, the S&P 500 was down 8.97 points, or 0.31 percent, at 2,887.75 and the Nasdaq Composite was down 85.09 points, or 1.05 percent, at 8,006.16.
Halliburton fell 5 percent after the oilfield services provider warned third-quarter earnings could be hurt from moderating activity in the Permian Basin and a slower-than-expected ramp-up of new Middle East contracts.
Rival Schlumberger dropped 1.8 percent and Baker Hughes, the oilfield services arm of General Electric, fell 2.8 percent. GE was down 1.1 percent, also weighed by UBS`s concerns over the company`s power business.
China`s JD.com slid 9.2 percent, down for the second day in a row, after police said the retailer`s Chief Executive Officer Richard Liu was arrested in Minneapolis last week after a rape allegation. Liu has denied any wrongdoing and was released on Saturday.
Declining issues outnumbered advancers for a 1.48-to-1 ratio on the NYSE and a 1.92-to-1 ratio on the Nasdaq.
The S&P index recorded 38 new 52-week highs and nine new lows, while the Nasdaq recorded 76 new highs and 42 new lows.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)
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