Investing.com - Top 5 things that rocked U.S. markets this week:
1. Facebook's Plunge Sets a Record
Facebook (NASDAQ:FB) sent a huge tremor through tech stocks this week with a worrying warning about revenue that sent the stock spiraling to a record-setting market-cap loss.
Shares of Facebook sank nearly 19% on Thursday, slashing the company’s value by about $120 billion. That was the largest single-day loss in market cap in Wall Street history.
Revenue missed expectations, but it was the conference call that really spooked investors.
“Looking beyond 2018, we anticipate the total expense growth will exceed revenue growth in 2019,” CFO Dave Wehner said on the conference call. “Over the next several years, we would anticipate that our operating margins will trend toward the mid-30s on a percentage basis.”
Facebook also predicted its total revenue growth rate would continue to decelerate in the third and fourth quarters.
2. Twitter’s Platform Health Hurts Stock
Just a day after Facebook’s drop, Twitter (NYSE:TWTR) caused its own shockwaves in the social media space.
The stock tumbled more than 20% on Friday after the company reported a surprise drop in average monthly users.
Average monthly users dropped to 335 million from 336 million in the first quarter, due to deletion of fake accounts and bots, or, as the company put it, “prioritizing the health of the platform.”
Shares of Twitter had wavered earlier in the week after President Donald Trump accused the company of shadow banning Republicans (effectively making the user impossible to find). The company responded that it does not shadow ban in any cases.
3. GDP Hits Strongest Level Since 2014
The latest measure of U.S. economic growth came in right in line with what Wall Street was expecting. GDP grew 4.1% in the second quarter, its strongest reading since the third quarter of 2014.
Strategists noted, though, that 4% of the growth came from personal consumption. That would be heavy lifting for the consumer to continue to prop up overall growth in the future. Growth may also have received a bump from foreign countries raking in supplies ahead of expected tariff implementation.
With respect to Federal Reserve policy, the numbers support the Fed’s current plan of gradual interest rate hikes.
Fed fund futures continued to price in a rate hike in September and the probability for a hike in December was last at 68.9%, compared to 69.5% before the release.
4. Oil Ends Higher as Supply Worries Persist
Crude oil prices ended the week slightly lower after a selloff Friday. But supply concerns remained front of mind for traders.
Data released this past week showed that crude oil inventories fell to their lowest level since 2015 as exports jumped and imports fell sharply.
Also, Saudi Arabia temporarily paused shipments through the Bab el-Mandeb strait, which joins the Red Sea to the Gulf of Aden, after two of its oil tankers were reportedly attacked by Houthi rebels.
The disruptions in the Middle East come as market participants continue to bet on further disruptions in oil flows underpinning oil prices.
"The potential for further disruptions remains high in Libya, Venezuela and Nigeria with last week seeing new disruptions in Norway and Iraq, and Saudi has little incentive to let inventories rise," Goldman Sachs said in a note to clients Thursday.
5. Trade Tensions Ease, Between U.S. and the EU at Least
The market’s trade-war worries may have hit an inflection point this past week.
Trump proclaimed the United States and the European Union had launched a "new phase" in their relationship following a meeting with European Commission President Jean-Claude Juncker on Wednesday.
The leaders pledged to expand European imports of U.S. liquefied natural gas and soybeans and both vowed to lower industrial tariffs.
They also agreed to refrain from imposing car tariffs while the two sides launch negotiations to cut other trade barriers, as well as re-examine U.S. steel and aluminum tariffs and retaliatory duties imposed by the EU “in due course.”
The upbeat remarks helped ease some of the fears of a transatlantic trade war. But there is still China to consider.
China said Thursday it was ready to retaliate against any increase in U.S. tariffs on Chinese imports -- be it $16 billion or $200 billion -- an official in Beijing said, according to Bloomberg.