Stocks close lower, pulled by Facebook, Alphabet and other tech stocks


A massive sell-off of Facebook shares and stocks of other big tech companies spilled over into the market, pushing major U.S. indices to steep declines to start the week.

Stocks opened with slight declines before losses accelerated rapidly. The S&P 500 lost 56.58 points, or 1.3%, to 4,300.46. The broad index closed last week down 2.2%. The tech-heavy Nasdaq Composite Index lost 311.21 points, or 2.1%, to 14,255.48. The Dow Jones Industrial Average lost 323.54 points, or 0.9%, to 34,002.92.

Monday’s moves continued a recent trend of underperforming large tech companies. Investors fled equities from high-flying equities as bond yields quickly spiked higher. Higher returns make the outsized profits of tech companies in the future less attractive.

After seeing big gains since the start of last year, technology has been particularly volatile in recent sessions. Monday’s sell-off marked the third decline of at least 2% in the Nasdaq Composite since early September.

Facebook stocks were hit harder than other big tech companies on Monday, with stocks slipping $ 16.78, or 4.9%, to $ 326.23, on their worst day of 2021. The stock is now down more than 14% from its all-time high.

The Facebook WhatsApp, Instagram and Facebook entities were not accessible to users on Monday morning, with users receiving error messages when trying to access the sites. Company whistleblower Frances Haugen is due to testify before Congress on Tuesday and detailed extensive issues with the social media giant.

Alphabet shares fell $ 57.67, or 2.1%, to $ 2,673.19. Amazon lost $ 93.48, or about 2.9%, to $ 3,189.78. All three have underperformed the S&P 500 over the past month and are among the largest companies in the entire US stock market.

“They’re just such a big chunk” of the market, said Mark Stoeckle, managing director of Adams Funds, Technology Stocks. “It’s hard to offset that kind of downdraft with the other 495 stocks in the S&P 500.”

The yield on the benchmark 10-year Treasury bond climbed to 1.481%, from 1.464% on Friday.

The major indices have suffered bouts of volatility in recent sessions, and many investors have said they expect more turmoil in the fall months. Investors are also watching negotiations in Congress closely, as lawmakers debate the debt ceiling ahead of a deadline this month to raise it so the government can pay its bills.

Meanwhile, Democrats are considering slashing the next spending package to improve its chances of passing. The Biden administration also said on Monday that it would maintain tariffs on Chinese imports as it urges Beijing to keep promises to buy more U.S. goods and services, but plans to start new trade negotiations with China.

“You have a combination of the uncertainty of DC, big headlines in China on Evergrande and in a context where you have seen bond yields rise,” said David Stubbs, global head of investment strategy at JP Morgan Private Bank . “All of this should ultimately be manageable, but that’s the problem of political uncertainty, especially with regard to the world’s two largest economies.”

In corporate news, Tesla shares rose $ 6.31, or 0.8%, to $ 781.53 after the automaker announced record third quarter deliveries. Tesla shares have been reinvigorated over the past month, gaining around 7% even as the broader market tumbled.

Merck climbed $ 1.70, or 2.1%, to $ 83.10, after the drug company said its antiviral pill was effective against Covid-19 in an advanced stage trial. Vaccine makers fell, Moderna down about 4.5% and Novavax down 1.8%.

Shares of China Evergrande and its property management unit ceased trading in Hong Kong on Monday. The subsidiary said this was pending an announcement on a possible takeover bid.

Another Chinese developer, Hopson Development, has also suspended its shares. He said this was pending an announcement regarding a transaction involving a Hong Kong-listed, anonymous target company.

“While this may provide shorter-term funding, the markets will always question the company’s long-term image,” said Kiran Ganesh, multi-asset strategist at UBS Asset Management. Evergrande carries over $ 300 billion in liabilities that investors believe are unlikely to pay.

Evergrande, China’s most indebted real estate developer, has kept markets on the lookout.

In commodities markets, oil prices hit a seven-year high as OPEC and a Russian-led group of oil producers agreed to continue ramping up production in measured steps, deciding not to open the taps more widely. West Texas Intermediate crude, the US benchmark, rose about 2.3% to $ 77.62 per barrel, closing at its highest level since November 2014.

Overseas, the pancontinental Stoxx Europe 600 slipped by around 0.5%. Volvo Cars has said it is planning an initial public offering and expects to list its Class B shares on the Nasdaq stock exchange in Stockholm.

In Asia, most of the major benchmarks fell. Hong Kong’s Hang Seng index fell 2.2%, while Japan’s Nikkei 225 index fell 1.1%. Mainland Chinese markets are closed until Friday for the Golden Week holidays.

Investors are closely watching negotiations in Congress as lawmakers debate the debt ceiling.


Spencer Platt / Getty Images

Write to Anna Hirtenstein at [email protected] and to Gunjan Banerji at [email protected]

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