Stock market slump tech shares downward

Tech Declines Amid Stock Market Turmoil

Stock Market Shakes After Meta’s Revenue Guidance and Spending Plans

April 25, 2024

The impact was felt on the Nasdaq 100 ETF. The stock market experienced a significant shake-up following Meta’s earnings announcement, with the $250 billion exchange-traded fund tracking the Nasdaq 100 (ticker: QQQ) taking a hit after regular trading hours. Meta, the parent company of Facebook, saw its stock tumble more than 15% after projecting second-quarter sales below analyst expectations and increasing its spending estimates for the year.

This decline sent ripples through the market, affecting stocks and investor sentiment. According to Sophie Lund-Yates at Hargreaves Lansdown, “Meta’s resources are vast, but not infinite. The language around spending plans has become bolder once more, and this could be what’s spooking markets.”

Ahead of Meta’s announcement, the broader market had struggled to gain traction, with the S&P 500 hovering near 5,070. Tesla Inc. surged 12% after Elon Musk announced plans to launch less-expensive vehicles, while Nvidia Corp. tumbled over 3%.

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Treasury 10-year yields rose four basis points to 4.64%, and the yen weakened beyond 155 per dollar, sparking concerns about intervention. Despite these fluctuations, Meta reported revenue of $36.5 billion in the first quarter, a 27% increase over the same period last year, with profit more than doubling to $12.4 billion. Yet, these results weren’t enough to offset investor concerns about the company’s spending plans and growth prospects.

Meta Earnings Report at Close 4/24/2024

The decline in Meta’s stock reflects broader trends in the stock market. A JPMorgan Chase & Co. indicator signaled a strong buying opportunity in US stocks, after reaching a threshold that typically precedes better-than-average gains. However, the shift away from some of the stock market’s cheapest strategies continues, with investors pulling around $200 million from value-based exchange-traded funds this month, while growth stocks attracted over $3 billion in inflows.

The outcome of Meta’s revenue guidance and the subsequent market reaction underscores the ongoing tension in the stock market, as investors grapple with interest rates, economic uncertainty, and geopolitical turmoil. The upcoming Federal Reserve meeting and Treasury’s quarterly refunding announcement could further influence investor sentiment, making it crucial to monitor these developments in the days ahead.

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