Tech Stocks Retreat as Meta’s Revenue Forecast Disappoints
Tech stocks led a retreat in US markets as Meta’s revenue forecast rattled investors eyeing the next high-stakes megacap earnings. The sharply lower-than-expected reading on US GDP for the first quarter adds to concerns about the health of the US economy.
Tech Continues to Slide
Nasdaq 100 futures fell 1.6% following a go-nowhere day for the major Wall Street gauges. Futures on the S&P 500 lost 1.2%, while those on the Dow Jones Industrial Average slipped 1.1%.
Meta shares suffered a drop of more than 15% as the market reacts to rising costs at the Facebook and Instagram owner. The company expects to spend up to $10 billion on AI infrastructure investments, raising concerns about the time it will take for the spending to translate into revenue. This decline in Meta’s stock is also pulling down tech stocks more broadly.
Pressure on High-Earnings Growth Companies
The disappointing revenue forecast for Meta is seen as a dent in hopes for a stock market rally. High-earnings growth and AI expectations at companies like Microsoft and Alphabet are in focus as they prepare to report their earnings.
US GDP Growth Falls Short
The US GDP growth in the first quarter of the year came in at a 1.6% annualized pace, falling well short of the expected 2.5%. This reading adds to the ongoing debate about the path of the Federal Reserve’s interest rate campaign.
Treasury yields rose after the GDP print, with the benchmark 10-year yield surging to 4.72%, its high for the year.
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