Market Update: Nasdaq Falls as Facebook Posts Biggest Loss in Stock Market History

U.S. stocks finished mostly lower on Thursday after Facebook’s disappointing earnings results triggered a selloff of technology shares just one day after the Nasdaq set a new record.

Facebook Weighs on Wall Street

Shares of Facebook plunged 19% on Thursday, extending an after-hours rout that began during the company’s latest earnings call. Technology bellwethers like Apple, Amazon and Netflix also slumped in after hours trade, leading the Nasdaq sharply lower.

By the end of trading Thursday, the Nasdaq Composite index had fallen 1% to close at 7,851.97. Just 24 hours earlier, the index closed above 7,900 for the first time in history.

Facebook’s total market capitalization fell by $119 billion to $510 billion, the worst single-day drop in Wall Street history.

The broader S&P 500 Index was also down on Thursday, sliding 0.3% to 2,838.23. Losses were mainly concentrated in two sectors, with information technology falling 1.6%.

Sectors tied to commodities outperformed the market, with energy and industrials shares rising more than 0.9%.

The Dow Jones Industrial Average bucked the downtrend, rising 113.58 points, or 0.5%, to 25,527.68. More than half a dozen blue-chip stocks rose 1% or more.

The CBOE Volatility Index, commonly known as the VIX, was little changed on Thursday in a sign of complacent market conditions. Wall Street’s fear index finished at 12.20 on a scale of 1-100 where 20 represents the historical average.

U.S. Data Largely Negative

Government economists released a batch of reports on Thursday showing weaker than expected positions on trade and durable goods orders.

Washington’s trade deficit in goods widened more than expected in June as exports declined. According to the Department of Commerce, the goods trade deficit grew to $68.3 billion in June, up 5.5% from the previous month.

Durable goods orders – a reliable gauge of factory demand – rose 1% in June, Commerce reported. That was well below the 3% advance analysts had expected.

Meanwhile, initial jobless claims rose more than expected last week, though the general trend continued to show a firming labor market. The number of Americans filing for first-time unemployment benefits rose 9,000 to a seasonally adjusted 217,000 in the period ended July 21, the Labor Department showed.

Cryptocurrency Market Stabilizes

Bitcoin and other digital currencies stabilized on Thursday, as investors continued to evaluate the latest push for a new crypto-backed ETF.

At the time of writing, cryptocurrencies as a whole were valued at more than $301 billion, according to CoinMarketCap. Trading volumes were around $13.8 billion, well off last week’s highs.

Bitcoin has found support above $8,000, with prices nudging 1% higher to $8,230. Earlier in the week, we predicted that a stalled recovery could lead to volatility ahead of expiring futures contracts on Friday.

Interest in bitcoin futures has grown significantly in recent months, which suggests more institutional traders were entering the picture. Last week, CME Group reported a 93% surge in average daily volumes for its bitcoin futures contract. On Tuesday, derivatives product hit record high volumes with 12,878 contracts.

Disclaimer: The author owns bitcoin, Ethereum and other cryptocurrencies. He holds investment positions in the coins, but does not engage in short-term or day-trading.

Featured image courtesy of Shutterstock.

Chief Editor to and Contributor to, Sam Bourgi has spent the past nine years focused on economics, markets and cryptocurrencies. His work has been featured in and cited by some of the world's leading newscasts, including Barron's, CBOE and Forbes. Avid crypto watchers and those with a libertarian persuasion can follow him on twitter at @hsbourgi