Tech stocks fell on Monday, June’s first day of trading, amid reports that the US government is planning to target a host of big companies in the industry with antitrust and business practice probes.
The index Nasdaq Composite today ended with a decline of 1.6% decline due to investor concerns about stricter regulatory control over the technology sector. The benchmark ended nearly 10% below its April high and reached 7,333.02 points.
The broader index S&P 500 dropped by 0.3% to 2,744.45 points, with communications companies reporting the worst performance with a decline of more than 2.5%. For technology and consumer companies, the decline was 1%.
The blue-chip index Dow Jones Industrial Average ended with a slight increase to 24,819.78 points.
The CBOE Volatility Index, which measures the implied volatility of S&P 500 options, was up 0.80% to 18.86.
Trade worries also weighed on the broader market. The Chinese Vice Commerce Minister Wang Shouwen said in a white paper Sunday that Washington would not be able to use pressure to force a trade deal on Beijing. He also refused to say whether the leaders of both countries would meet at the G-20 summit to work out an agreement later this month.
The benchmark 10-year US note yield fell to its lowest level since September 2017.
Meanwhile, the US manufacturing activity fell last month to its slowest pace of growth since October 2016, according to the data from the Institute for Supply Management. The pace of expansion also disappointed economists.
In afternoon trading, St. Louis Federal Reserve bank chief James Bullard reportedly voiced support for a future cut in short-term interest rates. In prepared remarks for a talk in Chicago, Bullard said a “downward policy rate adjustment may be warranted soon to help re-center inflation and inflation expectations at target and also to provide some insurance in case of a sharper-than-expected slowdown”.
Corporate stocks performance
The shares of Alphabet plunged 6.1%, sending Google’s parent company on the road to its biggest one-day drop since April 30.
Facebook shares fell by 7.5% after the Wall Street Journal reported that the Federal Trade Commission will look at social networking practices and how they affect digital competition.
Amazon shares fell by 4.6% and Apple wiped out 1% of its market cap.
Microsoft Corporation also fell sharply during the technology tense trading session with its stocks declining by 3.10%.
The stocks of FTD Companies Inc and Changyoucom Limited fell to an all-time low, wiping out 75.83% and 51.2%, respectively. Downers Grove-based FTD Companies is filing for Chapter 11 bankruptcy protection and will break the 109-year-old business into pieces. Changyou.Com fell after its stocks were downgraded by investment analysts at ValuEngine from a “sell” rating to a “strong sell” rating in a report issued on Monday.
The top performers on the S&P 500 were Capri Holdings Ltd (+4.74%), LyondellBasell Industries NV (+4.63%) and Pacific Gas & Electric Co (+4.62%), while on the flipside were Centene Corp (-10.27%), Facebook Inc (-7.51%) and Alphabet Inc (-6.12%).
Corporate earnings reports
Box Inc, a leader in cloud content management, today announced financial results for the first quarter of the fiscal year 2020, which ended April 30, 2019. The company’s revenue for the first quarter was 163.0 million USD, an increase of 16% YoY. Deferred revenue as of April 30, 2019, was 330.4 million USD, an increase of 15% from the first quarter of the fiscal year 2019. During the reporting period, the company’s operating loss was 35.4 million USD or 22% of revenue. Free cash flow in the first quarter was positive 13.4 million USD. This compares to a positive 7.3 million USD in the first quarter of the fiscal year 2019.
Coupa Software reported adjusted earnings and revenue for the first quarter that beat analyst estimates, while company guidance was mixed. The Coupa earnings news sent shares in the enterprise software maker up in extended trading late Monday. Coupa said it earned 0.03 USD per share, swinging to a profit from a year earlier, with revenue rising 44% to 81.3 million USD. A year earlier, Coupa lost 0.01 USD per share on sales of 56.4 million USD.