Facebook Earnings Send Markets Reeling

Among the best-performing non-leveraged ETFs of Thursday, the iPath Series B S&P 500 VIX Short Term Futures ETN (VXX B+) increased 9.9% and the ProShares VIX Short-Term Futures ETF (VIXY A) advanced 10.1%, briefly testing their short-term resistances at the 50-day simple moving average. Meanwhile, the CBOE Volatility Index climbed 12.6% to 24.1.

Meta Platforms shares plunged over 20%, erasing over $200 billion from the company’s market capitalization.

“This is definitely shaking investors’ resolve around the recent relief rally that we’ve been seeing in tech,” Robert Pavlik, chief investment strategist at SlateStone Wealth LLC, told Reuters.

Meanwhile, other big tech names also sold off in the broad risk-off selling pressure.

“Those stocks were really priced way beyond perfection,” Daniel Genter, chief executive and chief investment officer at RNC Genter Capital Management, told the WSJ. “People are saying, well, guess what, perfection is not here.”

Tech stocks have enjoyed a dominant position amid low interest rates and copious liquidity, but with elevated inflation and the Federal Reserve indicating a shift to a more aggressive rate-hike policy to combat rising consumer prices, money managers are adjusting portfolios.

“People are going to start increasing allocations to value stocks, and to do that they will have to sell their growth stocks, even if they are down 15% to 30%,” Jack Murphy, chief investment officer of Easterly Investment Partners, told Reuters.

The markets are now waiting on Amazon.com Inc., which will report its quarterly earnings after the closing bell. The e-commerce company previously warned in late 2021 of a challenging end to 2021 due to ongoing global supply chain problems, the Wall Street Journal reports.

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