Stocks Tumble Amid Facebook Backlash and Debt Ceiling Concerns

Strategic Insights -

The US stock market opened Monday morning lower, driven by a significant backlash against Facebook and concerns over the nation's debt ceiling. Technology stocks, in particular, were hit hard, with the S&P 500 falling 0.5% and the Nasdaq composite index plummeting 1.5%. The Dow Jones Industrial Average, however, managed a slight gain, thanks to a surge in Merck shares. Meanwhile, major retailers like Amazon and Alphabet slid, with Amazon now trading below its 50-day moving average.

Key Takeaways:

  • The S&P 500 fell 0.5% amid a backlash against Facebook, with the stock gapping down to a loss of over 3% and hitting its lowest price since June.
  • The Nasdaq composite index fell 1.5%, with technology stocks broadly out of favor, while the Communications Services SPDR fell 1.7%.
  • Merck shares rose nearly 3% after Friday's 8.4% surge, driven by promising trials of a Covid-19 antiviral pill, and helped lift the Dow Jones Industrial Average.
  • The Russell 2000 index dropped 0.5%, while the IBD 50 ETF, which focuses on innovative companies, slid 1.7%.
  • Energy and financial stocks rose on the IBD 50 index, but eight components, mostly techs, fell 4% or more, with Upstart Holding and MongoDB experiencing significant losses.
  • In Asia, major bourses fell, including the Hong Kong Hang Seng Index, which dropped 2.2%, and the Tokyo Nikkei 225 Index, which lost 1.1%, due to uncertainty surrounding debt-burdened China Evergrande Group.

Statistics:

  • S&P 500: fell 0.5%
  • Nasdaq composite index: fell 1.5%
  • Dow Jones Industrial Average: eased 0.1%
  • Merck shares: rose nearly 3%
  • Amazon.com: fell 1.6%
  • Alphabet: undercut Friday's low and is at the lowest since Aug. 3
  • Facebook stock: gapped down to a loss of over 3% and is at the lowest price since June
  • Russell 2000 index: dropped 0.5%
  • IBD 50 ETF: slid 1.7%

Sources:

  • "Research leaders and the best-performing stocks of each IBD 50 member company since its inception date" - IBD 50 ETF
  • "Frances Haugen" - "60 Minutes" (CBS News)
  • "Hong Kong's Hang Seng Index fell 2.2% and the Tokyo Nikkei 225 Index lost 1.1%" - Dow Jones
  • "S&P 500 fell 0.5% and the Nasdaq composite index fell 1.5%" - IBD (Investors.com)
  • "Dow Jones Industrial Average eased 0.1% and the Russell 2000 index dropped 0.5%" - IBD (Investors.com)