While you were sleeping: Twitter sinks
May 7 (BusinessDesk) – Wall Street slid as Twitter led a decline in tech stocks amid concern about valuations for the industry, while worries about the escalation of the conflict in Ukraine also weighed on the market.
Shares of Twitter sank, last down 15.9 percent, as post-initial public offering restrictions on selling the stock expired, underpinning concern about the company’s outlook.
"The move is bigger than expected and is indicative of the negative investor sentiment towards Twitter right now," Atlantic Equities analyst James Cordwell told Reuters. “I am starting to think that sentiment might have got too negative, but I don’t see anything that can turn this around in the near term.”
Other tech stocks slumped in Twitter’s wake as sentiment has been shaky on the industry in recent weeks. Shares of LinkedIn sank 6 percent, Netflix slid 4.4 percent, Facebook declined 3.8 percent, Amazon fell 3.5 percent, while Groupon fell 2.9 percent.
With about an hour of trading left in the day in New York, the Dow Jones Industrial Average dropped 0.7 percent, the Standard & Poor’s 500 Index slid 0.7 percent, and the Nasdaq Composite Index fell 1.1 percent.
Slides in shares of Merck and Pfizer, down 2.6 percent and 1.9 percent respectively, led the Dow lower. Merck’s decline came as it agreed to sell its consumer products’ unit to Bayer for US$14.2 billion.
On the economic front, a Commerce Department report showed that the US trade deficit shrank in March, narrowing 3.6 percent to US$40.4 billion, boosted by exports. The data underpinned the view that the US economy has gathered strength.
“The strong finish to the last quarter points to further improvement in the trade balance in the coming months if this positive momentum is sustained," Millan Mulraine, deputy chief economist at TD Securities in New York, told Reuters.
Investors will closely monitor US Federal Reserve Chairman Janet Yellen’s testimonies to Congress on Wednesday and Thursday for a potential fresh update of her take on the economy.
In Europe, the Stoxx 600 Index finished the session with a slide of 0.3 percent from the previous close. The UK’s FTSE 100 fell 0.4 percent, Germany’s DAX shed 0.7 percent, while France’s CAC 40 dropped 0.8 percent.
A report showed that retail sales in the euro zone unexpectedly increased 0.3 percent in March from the previous month, accelerating from a revised 0.1 percent advanced in February.
Separately, Markit’s Purchasing Managers’ Index for services in the euro region rose to 53.1 in April, up from 52.2 in March, bolstered by Germany.
“The final PMI confirms the earlier flash estimate, indicating that the euro zone started the second quarter with the fastest growth seen for three years,” Chris Williamson, chief economist at Markit, said in a statement, adding that “at this rate we can expect GDP to rise by at least 0.5 percent in the second quarter.”