Written by Brenda Nakalema

Dow falls, Nasdaq Drops as Meta’s Post- Earnings Plunge Drags On Tech- and What Else is Happening in the Stock Market Today

The deep plunged taken by the share price of the parent company of Facebook, Meta Platforms, weighed heavily on the …

The deep plunged taken by the share price of the parent company of Facebook, Meta Platforms, weighed heavily on the wider sector, causing stocks to fall. Futures of Dow Jones Industrial Average- of which Meta Platforms (ticker: FB) isn’t a constituent- showed an open 120 points or 0.3% lower, after the index gained 224 points Wednesday, closing at 35,629. The S&P 500 futures indicated a start 1.1% down, with the Nasdaq on track to drop 2.2%.

Meanwhile, abroad, the pan- European Stoxx 600 dropped 0.7%, and Tokyo’s Nikkei 225- proving a correlation between it and the tech-heavy Nasdaq index- dropped 1.1%.

The dismal quarterly earnings and outlook posted by Facebook’s parent company on late Wednesday saw the stock drop almost 23% in after-hours trading; this was matched by a 20% fall in the Thursday premarket trading. If the shares continue to nosedive as they’ve been passed the 18.96% mark in the coming days, it will represent the worst day ever for the stock.

“Huge penny-stock move for one of the biggest companies on the planet,” Neil Wilson, an analyst at broker Markets.com. “The big question is whether these numbers from Meta spark a renewed drawdown for tech stocks.”

A strategist at Deutsche Bank, Jim Ried, pointed out that the after-hours losses experienced by the company are equal to the erasure of over $200 billion in market capitalization- more than the market value of Netflix (ticker: NFLX). “This gives a scale of the damage done”, he concluded.

Wall Street had a number of things to complain about when it comes to Meta’s results; Profit was weaker than expected, the higher costs linked to spending on the metaverse and the company faced reductions in revenue owing to changes by Apple (ticker: AAPL) to its mobile advertising rules.

However, none of these factors is as damaging as the fact that people are spending less and less time on its platforms- including Facebook, Instagram, and WhatsApp- and because of this, the revenue in the current quarter is expected to be far below what was previously estimated.

Meta’s troubles seemed to be like a force of gravity, pulling other tech stocks down and dragging the Nasdaq lower- this had an effect on other social-media stocks. Snap (ticker: SNAP), Pinterest (ticker: PINS) and Twitter (ticker: TWTR) all experienced premarket losses of roughly 10%. Both Snap and Pinterest are set to report results in the coming days.

Overall, Tech stocks had a rough start to this year, with the Nasdaq trading in correction territory while investors grapple with rising interest rates and tighter monetary policy from the Federal Reserve. However, the sector has mostly been on a rebound this week, just like the rest of the stock market. With Meta’s latest performance, though, this streak of positivity was quickly put to an end.

“The S&P 500’s advance over the last four sessions is +6.07%, which is the biggest four-day rise since the relief rally after the November 2020 Presidential election,” said Reid. “Today put us back into reverse gear for a period of time.”

With more than 110 companies within the S&P 500 that will be reporting quarterly results this week, investors will be keenly watching the earnings. Markets will see reports emerging from Amazon (ticker: AMZN), ConocoPhillips (ticker: COP), Merck (ticker: MRK), Activision Blizzard (ticker: ATVI) and a few others in the day ahead.

Here are six stocks on the move today

Meta Platforms (ticker: FB) was in the spotlight, down 20% in the premarket after earnings fell woefully short of expectations despite the fact that revenue beat estimates.

Snap (ticker: SNAP), Pinterest (ticker: PINS), Twitter (ticker: TWTR), and Roku (ticker: ROKU) dropped 15%, 7.5%, 7% and 4.5% in premarket trading respectively. Just like Meta, all four companies are heavily reliant on advertising revenue.

Shell’s (ticker: SHEL) London- listed stock gained 1.7% after the oil producer posted robust earnings for the fourth quarter, with adjusted profit at $6.39 billion, surpassing expectations of $5.07 billion. This positive performance could be attributed to rebounding commodity prices. Shell plans an $8.5 billion share buyback program for the first half of this year and commented that it expects to increase its dividend by 4% in the current quarter.