By Yasin Ebrahim
Investing.com – The S&P 500 remained under pressure Thursday, as a plunge in Facebook-parent Meta Platforms put growth stocks back into the crosshairs following a recent revival.
The S&P 500 fell 1.7%, the Dow Jones Industrial Average slumped 0.8 %, or 291 points, the Nasdaq slipped 2.7%.
Meta Platforms (NASDAQ:FB) reported fiscal-fourth quarter results that missed on the bottom line as it failed to grow users for the first time, and signaled more pain ahead.
The social media giant flagged rising competition from TikTok, the impact of Apple's iOs changes, and costs associated with funding its foray into the metaverse as headwinds. Apple last year introduced changes to its iPhone operating system that gave users the option to block apps from accessing the identifier for advertisers, or IDFA, used by advertisers to track users and serve them ads on their iPhones.
{{0)|Oppenheimer}} cut its target on Meta to $375 from $405, forecasting lower growth estimates from the longer-than-expected "IDFA workaround [...] combined with a strategic push of engagement to Reels—to combat TikTok—albeit at lower monetization and FX headwinds." {{0|JPMorgan, meanwhile, downgraded the stock to neutral from outperform.
Meta’s disappointing quarterly results sent shockwaves across the social media stocks Snap (NYSE:SNAP) and Pinterest (NYSE:PINS), both of which report after the closing bell, down about 23% and 9% respectively, while Twitter (NYSE:TWTR) fell more than 5%.
Amazon (NASDAQ:AMZN), which also reports results after the closing bell, was down more than 6%,
The renewed selling in growth stocks like tech has cast doubt on whether the recent revival in growth has faded, but some suggest that further selling will subside as the broader market is nearing a bottom.
“I think we're in the seventh inning of a nine-inning game of the selloff in growth stocks … you've had a lot of damage done,” Chief Strategist at Spouting Rock Asset Management Rhys Williams told Investing.com in an interview on Thursday.
But it wasn’t all doom and gloom on the earnings front, with T-Mobile (NASDAQ:TMUS) upbeat guidance and better-than-expected earnings that overshaded revenue that fell short of Wall Street estimates. Its shares jumped 10%.
Cyclical stocks like energy and financials were in the red, but outperforming the broader market selloff, with latter supported by climb in bank stocks as 10-year yields flirted with 1.9%.
Allstate (NYSE:ALL), Invesco (NYSE:IVZ) and People’s United Financial (NASDAQ:PBCT) were more than 1% higher.
On the economic front, jobless claims fell more than expected last month ahead of the monthly nonfarm payrolls report due Friday.
The jobs on Friday, however, could prove somewhat of nothingburger as many are bracing for weaker data following the impact of the omicron.
“I don’t think this nonfarm payroll report will have a major impact on markets as people aren’t expecting a great number,” Williams said. Economists are forecasting the economy added 150,000 jobs last month.