We began a new trading week much the same as we began the last one: skimming off year-to-date profits from major indexes having been trading up 20% or so. We’ve now given back 5% plus in just the past couple weeks, led by the tech-heavy Nasdaq -2.14%, -311 points, followed by the S&P 500 -1.3% to an even 4300, and the Dow -0.94%, -323 points, to a hair above 34K. The small-cap Russell 2000 lost -1.08% on the day.
Today’s downward catalyst wasn’t a Chinese real estate company, but a social media staple,
Facebook
FB
, which dropped -4.9% on the day (though it had been -5.5% earlier in the session). An internal whistleblower came forward in the
Wall Street Journal
and CBS’ “60 Minutes” Sunday evening, claiming Facebook is favoring “profits over safety,” and that it misled investors. Facebook shares are now -15% off their all-time highs.
To make matters worse for Facebook today, its self-managed servers have led to outages on both its Facebook and Instagram platforms for much of the day today. This afternoon, the company’s CTO assured users that efforts were ongoing to restore these platforms for its massive daily user base. It would appear this is unrelated to the accountability issues facing Mark Zuckerberg’s Zacks Rank #3 (Hold)-rated company at the same time.
Interestingly, the negative news on Facebook took hold across the social media landscape today, with
Twitter
TWTR
,
Snap
SNAP
and
Pinterest
PINS
all tumbling 6% on the day, as well. Looking a little closer, this is not necessarily a true profit-taking move among these names: while SNAP remains +43% year to date, Twitter was already underperforming the broader index, and Pinterest has already shed -27% so far in 2021.
The good news today came from August
Factory Orders
, which were slightly hotter than expected at +1.2% last month, and half a percentage point higher than the July headline.
Core Capital Goods Orders
for August reached +0.6%, up slightly from the +0.5% the previous month. This points to healthy demand continuing, even as supply chain issues continue to generate steady headwinds across sectors.
We’ll look at today’s occurrence as a market re-set activity, ultimately. What are we re-setting? Expectations, mostly. Only a couple weeks ahead of a bevy of Q3 earnings reports about to be released, investors would do well to shed expectations like those we’d seen in Q2 — heady quarterly growth combined with low base comparisons in the year-ago quarter. Currently, the S&P is -5% from its all-time highs; the Nasdaq is -7%.
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