Stocks dropped as a large decline in tech stocks that began last week carried over to this Monday.
Tech heavy Nasdaq Composite fell 1.3%, as shares of Facebook and Netflix fell around 3.6 percent and 5 percent. Amazon also dropped 1.6 percent along with Google parent company Alphabet which fell 1.5 percent.
As the tech sector dropped 1.9 percent the S&P 500 in turn declined 0.5 percent. Meanwhile the Dow Jones Industrial Average declined 100 points, with Microsoft dropping over 2 percent.
All tech stocks took a nosedive last week following Facebook’s 19% drop on Thursday. This drop came directly after Facebook reported weaker-than-expected revenue and lowered its revenue growth forecast. Facebook’s tremendous drop last week culminated in the whole tech sector taking a fall of 1.15%.
“The guys at the top don’t stay there forever,” said Kim Forrest, senior equity analyst at Fort Pitt Capital. “I don’t see anyone displacing them right now, but they do have to make changes to their business models. For example, Facebook has to spend more to make sure people aren’t abusing the platform. Investors like more money, not less.” (Source: CNBC, “Dow drops 100 points, Nasdaq falls more than 1% as tech slides”)
Investors also have been exhibiting concerns over trade issues following a report from Reuters that Canada, the European Union and South Korea will meet next week to discuss a response to threats made by President Donald Trump regarding tariffs placed on U.S. auto imports.
“I think the market is headed for jittery times,” said Peter Cardillo, chief market economist at Spartan Capital Securities. “Those Tariffs are showing up in earnings reports and eventually will hit the consumer. Once that happens, consumer sentiment will dampen.”
So far already, Tyson Foods has lowered its fiscal-year earnings forecast, citing tariff concerns and uncertainty on trade policies as the reason for the drop. Shares of Tyson Foods have fallen over 7 percent.
In the meantime, Caterpillar stated in their Q2 earnings report that tariffs will cost them between $100 to $200 million in additional material costs during the second half. However, they did report better-than-expected earnings and raised their full year outlook as well. They plan on offsetting the added costs from the tariffs by raising their prices.
The Federal Reserves latest monetary policy meeting is scheduled to start on Tuesday and market expectations for a rate hike are 3%, according to CME Group’s Fed Watch tool. However, investors will continue to try and find clues on how the central bank plans on normalizing policy.
Ahead of the meeting, treasury yields rose on Monday, with the 10-year yield hitting 2.99 percent, which will be its highest level since June 13.