Tech stocks drop as Congress scrutinizes social media
NEW YORK » Technology companies dropped Wednesday as Facebook and Twitter executives testified before Congress. Consumerfocused companies like Amazon and Netflix also slumped.
Facebook Chief Operating Officer Sheryl Sandberg and Twitter CEO Jack Dorsey told a Senate panel they are working to stop manipulation of their services by foreign countries. Legislators criticized Alphabet, Google’s parent company, for refusing to send its CEO to the hearing.
In a separate hearing, House Republicans accused Twitter of bias against conservatives, a charge not backed up by evidence.
The U.S. and Canada resumed negotiations to try to keep Canada in an updated North American trade pact that also includes Mexico. Canada’s trade envoy sounded positive after three hours of talks, and investors are confident Canada will be included in the final deal.
Technology companies like Microsoft and consumer-focused companies, most notably Amazon, have done far better than the broader stock market for years, and throughout that time they have quickly recovered from nearly every brief decline.
But Julian Emanuel, chief equity and derivative strategist for BTIG, said Wednesday’s hearing came at a time when investors have more concerns about those stocks than in recent years: Facebook, Twitter and Netflix all plunged about 20 percent in July after they reported weak user growth, and they’re yet to recover.
“The reflex reaction to buy these names on every dip, which has been the case the last few years, has broken,” he said. “That kind of damage takes a bit of time to heal itself.”
The S&P 500 index slid 8.12 points, or 0.3 percent, to 2,888.60. The Nasdaq composite, which has a high concentration of technology companies, tumbled 96.07 points, or 1.2 percent, to 7,995.17. The Russell 2000 index of smaller-company stocks lost 5.73 points, or 0.3 percent, to 1,727.65.
The Dow Jones Industrial Average rose 22.51 points, or 0.1 percent, to 25,974.99 as the weaker dollar sent industrial companies including 3M and Caterpillar sharply higher.
Twitter fell 6.1 percent to $32.73 and Facebook lost 2.3 percent to $167.18. Video chat company Snap shed 4.5 percent to $10.11.
Many of the market’s largest companies and the year’s most successful stocks traded lower. Microsoft fell 2.9 percent to $108.49 and Alphabet slid 1 percent to $1,199.10. Amazon dropped 2.2 percent to $1,994.82 while Netflix sank 6.2 percent to $341.18.
Traditionally defensive companies did better. Utility Southern Co. rose 1.8 percent to $44.66 while PepsiCo gained 1.9 percent to $113.12. Utilities have fared worse than the broader S&P 500 this year, while household goods stocks have fallen.
The dollar rose to 111.51 yen from 111.48 yen. The euro rose to $1.1623 from $1.1581. The ICE US Dollar index slipped, which helped exporters including industrial and materials companies. The weaker dollar also sent metals prices higher.
Halliburton CEO Jeffrey Miller said the company is seeing a decrease in North American drilling activity because of customers’ tight budgets, and the decline is worse than it previously expected. It also reported project delays in the Middle East.
Miller said those problems will trim Halliburton’s third-quarter earnings by 8 to 10 cents a share. The stock fell 6 percent to $37.13.
Benchmark U.S. crude declined 1.6 percent to $68.72 per barrel in New York while Brent crude, used to price international oils, shed 1.2 percent to $77.27 per barrel in London.
Wholesale gasoline lost 1.5 percent to $1.96 a gallon. Heating oil fell 0.9 percent to $2.23 a gallon. Natural gas slid 1 percent to $2.80 per 1,000 cubic feet.
Luggage and accessories retailer Vera Bradley jumped after it posted strong results in the second quarter and raised its profit forecast for the year. The company said fewer items were marked down, which improved its profit margins. The stock climbed 14.8 percent to $16.40.
Furniture and housewares maker RH fell 13.1 percent to $131.51 after its second-quarter sales came up short of analysts’ projections.
U.S. shares of Chinese internet retailer JD.com dropped another 10.6 percent to $26.30 after a Minneapolis police report showed company founder and CEO Richard Liu was arrested over a felony rape accusation.