U.S. stocks fell on Thursday as investors’ renewed optimism on big tech names, driven by a slew of strong earnings, took a turn down after Facebook parent Meta Platforms reported disappointing quarterly results.
The Nasdaq Composite dropped 2.5%, and the S&P 500 slid 1.6%. The Dow Jones Industrial Average fell 245 points, or 0.6%.
Meta Platforms shares plunged more than 25% after the company’s quarterly profit fell short of expectations. The company also issued weaker-than-expected revenue guidance for the current quarter.
“There was a lot to not like” from Meta’s report, Metropolitan Capital Advisors CEO Karen Finerman told CNBC’s “Fast Money.” She noted that the company’s revenue growth expectations were the “spookiest” part of the release. However, she added that the move down seems a “little overdone.”
Thursday’s moves come after the major averages notched a four-day win streak during the regular session Wednesday, led by Google parent Alphabet. Investors bought the dip in tech stocks after shedding their positions throughout January as they braced for potential rate hikes from the Federal Reserve.
Strong earnings from Microsoft, Apple and Alphabet drove investors back into tech, reminding them that fundamentals are still strong, but Meta Platforms’ weak guidance has caused some to reverse course.
Other social media names, including Snap and Twitter, followed Facebook shares lower on Thursday. Snap shares slid 18%, and Twitter dropped about 6%.
Spotify Technology, meanwhile, fell 12% after the company’s latest quarterly figures showed a slowdown in premium subscriber growth. Amazon, which will report after the closing bell, fell 4%.
In early earnings news, Dow component Honeywell’s shares fell 4.8% after the company beat narrowly on profit but fell short on revenue and provided lower-than-expected guidance.
On the economic data front, U.S. jobless claims came in at 238,000 for the week ending Jan. 29, the Labor Department reported Thursday. Economists polled by Dow Jones expect initial claims to have fallen to 245,000 from 260,000 the week before.
Those numbers followed the release of ADP’s surprisingly downbeat private payrolls data Wednesday. Investors are still looking forward to Friday’s release of nonfarm payrolls data. Consensus estimates see a gain of 150,000 jobs, according to Dow Jones, but Wall Street forecasters say the actual tally will be far lower, with one estimating a loss of 400,000 jobs in January.
In central bank news, the Bank of England announced a quarter-percentage-point interest rate increase, while the European Central Bank held the line on its benchmark rate despite inflation in the euro zone rising to a new record.
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