Facebook-led tech slump dims broader stock gains

Associated Press

A plunge in Facebook shares erased almost $120 billion of the social media giant’s market value Thursday, snapping a three-day winning streak for the S&P 500 index.

Facebook’s tumble was the worst-ever single-day drop in value for a U.S. company, and led a sell-off in technology companies that offset solid gains in other areas of the market, including industrial and energy stocks and consumer goods companies.

The broader gains reflect another round of strong company earnings and fresh optimism among investors that trade tensions between the U.S and European Union may be on the mend.

“It’s a shock what happened to Facebook, but that little improvement in the trade picture and the continuation of the earnings results have just been spectacular,” said Ted Theodore, portfolio manager at TrimTabs Asset Management.

The huge loss in Facebook’s value weighed on broad market indexes. The S&P 500 index dropped 8.63 points, or 0.3 percent, to 2,837.44. The Nasdaq composite index, which is heavily weighted with technology companies, lost 80.05 points, or 1 percent, to 7,852.18.

The Dow Jones Industrial Average, whose 30 members don’t include Facebook, had a much better day, rising 112.97 points, or 0.4 percent, to 25,527.07.

The Russell 2000 index of smaller-company stocks gained 10.16 points, or 0.6 percent, to 1,695.36. More stocks rose than fell on the New York Stock Exchange.

The S&P 500, the market’s benchmark index, is still on track for its fourth weekly gain in a row.

Facebook, which closed at an all-time high of $217.50 on Wednesday, fell to $176.26 after warning investors that it sees slower revenue growth ahead, and that its user base and revenue grew more slowly than expected in the second quarter. The 19 percent drop was the biggest decline for the company since it went public in 2012.