Meta slump drags stocks lower, oil falls
Stock markets fell Thursday, dragged down by a massive plunge in the shares of Facebook parent company Meta following disappointing earnings.
Shares in Europe were also lower in afternoon trading as the Bank of England raised interest rates for the second time in a row while the European Central Bank kept its ultra-loose monetary policy intact.
Meanwhile, oil prices fell a day after top producing countries led by Saudi Arabia and Russia announced another modest increase in output.
Attention on Wall Street was firmly focused on Meta, which after the close of the market on Wednesday delivered a gloomy mix of a sharper-than-expected drop in profit, a decrease in users and threats to its ad business.
Already jittery markets have punished pandemic-era darlings including Netflix for disappointing results, but many firms have seen their share prices bounce back as investors continue to push indices back up to record levels.
Meta shares fell by more than 25 percent, erasing $200 billion off its value.
The plunge "is raising doubts about the sustainability of the broader rebound effort seen in recent sessions," Briefing.com analyst Patrick O'Hare said in a note to investors.
"It is certainly feeding doubts about the sustainability of big percentage moves made by smaller stocks that were simply rebounding from oversold conditions on no news," he added.
The tech-heavy Nasdaq Composite index fell 2.6 percent at the start of trading, while the broad S&P 500 gave up 1.5 percent.
The blue-chip Dow slid 0.4 percent.
In Europe, the BoE hiked its rate by a quarter-point to 0.5 percent to tackle soaring inflation which it said would peak at 7.25 percent in April.
The pound rose as the four of bank's nine members wanted a 0.5-point jump to 0.75 percent.
That helped push down London's FTSE 100, which has many multinational companies hurt by converting foreign sales into a strong pound.
The ECB, as expected, left its interest rates and stimulus exit plan unchanged, despite eurozone inflation unexpectedly rising to a record 5.1 percent in January.
Analysts viewed the figure as a potential headache for ECB President Christine Lagarde, who had previously ruled out a rate hike this year.
Lagarde admitted, however, that inflation would likely stay higher for longer than expected, though it was still set to come down later this year.
"More slowly than the US Fed and the Bank of England, the European Central Bank is also shifting its stance in response to the sustained inflation overshoot," said Berenberg Bank economist Holger Schmieding.
Traders in recent weeks have been heavily occupied by the Federal Reserve's timetable for hiking interest rates, with speculation rife over how much it will raise them in March and how many more times this year.
Several officials have come out in recent days to soothe concerns about a hard and fast approach, while US inflation data released next week will be closely watched for an idea about the central bank's plans.
US private companies shed jobs last month for the first time since December 2020 as the Omicron coronavirus variant complicated business -- a potential harbinger of bad news for the upcoming government employment report due Friday.
"Forecasts for Friday's payrolls are now all over the place with many calling for a negative print in January," said National Australia Bank's Rodrigo Catril.
"Depending on the magnitude of the disruption, this can potentially become a solid excuse for the Fed to wait on the sidelines after a first rate hike in March."
- Key figures around 1430 GMT -
London - FTSE 100: DOWN 0.4 percent at 7,555.61 points
Frankfurt - DAX: DOWN 1.1 percent at 15,437.77
Paris - CAC 40: DOWN 1.2 percent at 7,032.11
EURO STOXX 50: DOWN 1.5 percent at 4,159.32
New York - Dow: DOWN 0.4 percent at 35,504.39
Tokyo - Nikkei 225: DOWN 1.1 percent at 27,241.31 (close)
Hong Kong - Hang Seng Index: Closed for a holiday
Shanghai - Composite: Closed for a holiday
Euro/dollar: UP at $1.1383 from $1.1304 late Wednesday
Pound/dollar: UP at $1.3595 from $1.3573
Euro/pound: UP at 83.74 pence from 83.28 pence
Dollar/yen: UP at 114.80 yen from 114.42 yen
Brent North Sea crude: DOWN 0.6 percent at $88.91 per barrel
West Texas Intermediate: DOWN 0.8 percent at $87.60 per barrel