A $250 billion exchange-traded fund tracking the Nasdaq 100 (ticker: QQQ) was struck after normal trading ended, as Facebook’s parent stock fell more than 15%. Meta expected lower second-quarter revenue and raised its year-end spending predictions.
“Meta’s resources are vast, but not infinite,” explained Sophie Lund-Yates of Hargreaves Lansdown. “The language around spending plans has become bolder once more, and this could be what’s spooking markets.”
In the run-up to the findings, the wider market struggled to gather impetus as traders positioned for economic data that would affect their views on the Federal Reserve’s next actions. The S&P 500 was hovering around 5,070. Tesla Inc. jumped 12% after Elon Musk promised to introduce less priced automobiles. Nvidia Corp. fell more than 3%.
Treasury 10-year rates increased four basis points to 4.64%. The yen fell above 155 per dollar, prompting intervention concerns.
The Facebook parent reported sales of $36.5 billion in the first quarter, up more than 27% over the same period a year earlier. It was a minor beat, as analysts expected sales of $36.1 billion on average, according to Bloomberg estimates. Profit more than quadrupled, reaching $12.4 billion.
We advise investors to focus on the positives,” said Tejas Dessai of Global X ETFs. “The company’s fundamentals continue to show strength, and that’s the key story.”
According to Mark Hackett of Nationwide, while the cohort of seven tech megacaps has performed well in the previous two years due to their higher profit growth relative to the broader market, this advantage may diminish in 2024 and even more severely in 2025.
“The ‘Magnificent Seven’ are not nearly as powerful as they once were,” Hackett stated. “We see this as a positive development for investors looking to diversify away from the recent market leaders.”
Interest rates being high for longer, along with economic uncertainty and geopolitical volatility, have reduced the attraction of some of the stock market’s cheapest tactics.
According to Bloomberg Intelligence, investors have removed around $200 million from value-based exchange-traded funds this month. In contrast, growth stocks have received more than $3 billion in inflows, despite a fragile stock market that has stoked fears of further fall. This drop in interest in low-cost equities follows poor performance by common value items.
Meanwhile, a JPMorgan Chase & Co. indicator is flashing a strong buy signal in US stocks after reaching a level that often anticipates above-average gains.
According to Andrew Tyler, JPMorgan’s director of US market intelligence, the bank’s US Tactical Positioning Monitor has reached a level that indicates a “attractive set-up” for the S&P 500.
According to the report, the stock gauge has typically risen over 3% in the 20 days following a comparable four-week change in positioning, compared to a 1% increase in other times.