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Alphabet, Twitter, Meta lead growth stocks lower
Snap loses quarter of its market value in premarket trading
Higher Treasury yields, Fed worries persist
Futures down: Nasdaq 1.03%, Dow 0.59%, S&P 0.67%
(Adds comments, details, updates prices throughout)
By Shreyashi Sanyal and Ankika Biswas
Oct 21 (Reuters) – Nasdaq futures tumbled over 1% on Friday as Snap Inc’s forecast of no revenue growth in the lucrative holiday quarter sparked a selloff in social media companies, with galloping U.S. Treasury yields adding to the losses.
The owner of photo messaging app Snapchat lost more than a quarter of its market value in premarket trading after it posted its slowest quarterly revenue growth in five years as advertisers cut spending due to inflation and geopolitical woes.
Other companies that rely heavily on ad revenue including Alphabet Inc, Twitter Inc, Meta Platforms Inc and Pinterest Inc fell between 1.9% and 8%.
“It’s not uncommon for companies to cut back on advertising spending during concerns of an economic slowdown,” said Robert Pavlik, senior portfolio manager at Dakota Wealth in Fairfield, Connecticut.
“Right now you don’t want to be in a Snap or a Meta, and it’s probably going to transfer over to Alphabet.”
The slide in mega-cap growth stocks also comes as the benchmark 10-year U.S. Treasury yield hit 15-year highs on expectations of aggressive rate hikes by the U.S. Federal Reserve.
Markets are widely expecting a fourth 75-basis-point hike at the central bank’s November meeting.
Shares of Microsoft Corp, Apple Inc, Amazon.com Inc and Tesla Inc were all down about 1% each.
“What you’re really seeing is a market that’s paying a little bit more attention to the yield on Treasuries and that’s giving investors a little bit more of a concern,” Pavlik said.
At 8:10 a.m. ET, Dow e-minis were down 180 points, or 0.59%, S&P 500 e-minis were down 24.5 points, or 0.67%, and Nasdaq 100 e-minis were down 114.5 points, or 1.03%.
In the previous session, U.S. stocks ended lower after comments from Philadelphia Fed President Patrick Harker added to jitters over the central bank’s rate-hiking spree and its impact on the economy.
Third-quarter reporting season so far has been better-than-feared, prompting analysts to nudge up their earnings expectations for S&P 500 companies to a 3.1% increase from 2.8% earlier in the week, according to Refinitiv data.
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