Back to top

Facebook Headlines Pressure Tech Market

Read MoreHide Full Article

Monday, March 19, 2018

Following a week bursting with economic data — including CPI, PPI and plenty of housing statistics — the front end of the week is very quiet. This gives us a good chance to take “stock,” especially with regard to this week’s strongly anticipated Federal Reserve meeting, where interest rates are expected to tick up another quarter percent, to a 1.50-1.75% range.

Dow futures rode up big in early 2018, cresting above 26,000 in late January to all-time highs. For the S&P 500 we saw much the same thing, with the high water mark coming on January 26 of this year. Since then, both indexes — after a couple weeks of profit-taking following the spike in non-farm payrolls and subsequent wage increases — have bounced around within a range beneath the all-time highs but above where they were closing for most of 2017.

Nasdaq, on the other hand, has more recently surmounted its all-time highs, closing a week ago just a few points shy of 7600. Led largely by forward-looking positive results in Q1 earnings season (set to report with high volume about 4 weeks from now), FANG stocks such as Facebook (FB - Free Report) and Apple (AAPL - Free Report) , as well as artificial intelligence firms like Nvidia (NVDA - Free Report) , helped push the tech-heavy Nasdaq to to new heights.

As of today’s pre-market, this narrative appears under pressure. Facebook, in particular, is facing a backlash as investigations into how the social media giant may have been compromised based on third-party data that may have affected the 2016 General Election. News headlines today referencing private firm Cambridge Analytica will delve largely into this realm. At this hour, Facebook shares are trading down 4%. For the year, FB is still up around 26%.

It’s rather early to ascertain whether the challenges Facebook is feeling this morning will spread to other FANG stocks or other social media outlets like Twitter (TWTR - Free Report) . As results remain somewhat nebulous, the chances for contagion are probably pretty high. But as it’s not entirely understood just what Facebook may have done wrong, it’s premature at the very least to think this issue will keep a company like Facebook under selling pressure for long.

Currently, based on earnings estimate revisions and other data, Facebook is a Zacks Rank #1 (Strong Buy) stock, but with a Zacks Style Score (Value, Growth, Momentum) of D. Facebook is currently leading the pre-market Nasdaq down roughly 80 points.

Mark Vickery
Senior Editor

Questions or comments about this article and/or its author? Click here>>

Zacks’ Best Private Investment Ideas

While we are happy to share many articles like this on the website, our best recommendations and most in-depth research are not available to the public.

Starting today, for the next month, you can follow all Zacks' private buys and sells in real time. Our experts cover all kinds of trades… from value to momentum . . . from stocks under $10 to ETF and option moves . . . from stocks that corporate insiders are buying up to companies that are about to report positive earnings surprises. You can even look inside exclusive portfolios that are normally closed to new investors.

Click here for Zacks' private trades >>

More from Zacks Ahead of Wall Street

You May Like