Stocks fell Thursday, the first down day in five sessions, as investors again sold off technology stocks, which came under pressure after Facebook parent Meta Platforms reported sluggish profits and warned of challenges to its business this year.
Social media stocks, including Snap and Twitter, plummeted on the news as volume in tech stocks resumed recently …… [+] stocks stumbled.
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The Dow Jones Industrial Average fell 1.5% to more than 500 points, while the S&P 500 fell 2.4% and the tech-heavy Nasdaq Composite fell 3.7%.
Tech stocks led the market lower Thursday: Despite a recent rally after January's selloff, investors' renewed optimism about tech stocks plummeted after Meta's huge earnings miss.
The company issued weaker-than-expected revenue guidance, with management warning of increased competition, slower user growth and ongoing challenges from changes to Apple's iOS advertising over the last year.
Shares of Facebook's parent company Meta are in the midst of their biggest one-day drop ever, falling 26 percent and evaporating more than $230 billion in market value alone, which now stands at about $670 billion.
Social media stocks were particularly hard hit after Meta's big loss: shares of Snap (formerly Snapchat) plunged 23 percent, while image sharing platform Pinterest fell 10 percent and social media platform Twitter dropped 6 percent.
Shares of other large technology companies also moved lower, including Amazon (down 7%), Alphabet (more than 3%) and Microsoft (nearly 4%).
Strong earnings from companies like Alphabet, Apple and Microsoft helped drive investors to sell off tech stocks after the Nasdaq fell into correction territory in January, down 9 percent that month alone. However, the renewed optimism in recent days proved short-lived, with investors selling off tech stocks again after Meta reported discouraging quarterly earnings late Wednesday.
"This is not just a disappointing quarter for Meta, but a make-or-break moment where investors will be forced to take a long, hard look at the company's competitive position and consider whether it won't enter a prolonged period of underperformance – which will make it difficult for the stock to rally quickly," predicted Adam Crisafulli, founder of Vital Knowledge.
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