Technology stocks were tipped to lead U.S. stocks lower again on Wednesday, with stock futures in the red, led by those for the Nasdaq-100 as regulatory concerns over high-profile names in the sector lingered.
Investors will get an update on fourth-quarter gross domestic product and hear from a Federal Reserve official.
What are the main benchmarks doing?
Dow Jones Industrial Average futures YMM8, -0.13% fell 82 points, or 0.3%, to 23,774, while S&P 500 futures ESM8, -0.15% dropped 11.2 points, or 0.4%, to 2,604.50. Nasdaq-100 NQM8, -0.57% futures, meanwhile, slid 65.25 points, or 1%, to 6,495.24.
Technology shares tumbled Tuesday, leading the overall market lower, as investors sweated over regulatory concerns for some high-profile companies. The Nasdaq Composite Index COMP, -2.93% tumbled 211.74 points, or 2.9%, to 7,008.81, while the Dow Jones Industrial Average DJIA, -1.43% dropped 1.4% and the S&P 500 index SPX, -1.73% fell 1.7%.
Investors are facing hefty losses for March. The Dow is looking at a 4.7% decline, while the S&P 500 and Nasdaq are on course to fall by 3.7% and 3.6%, respectively.
What’s driving markets?
Regulatory concerns have started to pile up for big tech names, a factor that led to a late-session slide for stocks Tuesday. Among them, Tesla Inc. is facing an investigation of a fatal crash of one of the company’s electric cars in California last week.
The NYSE FANG index, a gauge tracking 10 tech titans, fell 5.63% Tuesday, the most since 2014 when the index first started, according to multiple reports.
Tech stocks were the high-fliers of 2017, and the Nasdaq remains up 1.5% this year, against losses for both the Dow and S&P 500. However, the sector has been under pressure, most recently driven by sharp losses for Facebook over its user-data crisis.
Investors may also be squaring their books as the end of the first quarter draws near in a week shortened by one day due to the Easter holiday. Analysts have said that could be part of what’s contributing to some of the recent volatility.
As well, bond yields will likely stay in focus after the 10-year government bond yield on Tuesday hit 2.76%, its lowest in seven weeks on worries about protectionist policies. The yield on the 10-year Treasury note TMUBMUSD10Y, -0.62% was last at 2.76%. Bond yields move inversely to prices, and a rally implies investors have been seeking a haven in bonds, away from stocks.
What are strategists saying?
“This week is a peculiar one with very little tier-1 data pending for release and with a holiday weekend coming up liquidity should be lower than usual. However, we need to keep in mind that it’s also the end of the month and fiscal quarter which means that large institutions and corporate names are closing off positions to book profits or limit losses,” said Konstantinos Anthis, researcher at ADS Securities, in a note to clients.
“In an environment of reduced volatility the effects of this portfolio readjustment are always magnified and provide some explanation to yesterday’s erratic price action so we need to remain guarded over the next 72 hours,” said Anthis.
Which stocks are in focus?
Facebook FB, -4.90% was off 0.8% in premarket on Wednesday amid reports that three users of its Messenger app will sue the social-media website over allegations of privacy violations. Shares took a hit Tuesday over reports CEO Mark Zuckerberg will face Congress over the company’s handling of user data, and over news of a probe by the Federal Trade Commission.
Twitter TWTR, -12.03% fell 0.9% in premarket. Shares tumbled Tuesday after short selling research firm Citron Research said it would short those shares citing vulnerability to privacy regulation, according to a report in The Wall Street Journal.
What data are in focus?
A final reading of fourth-quarter GDP data is due at 8:30 a.m. Eastern Time, along with advance trade in goods. Pending home sales for February are due at 10 a.m. Eastern.
Atlanta Fed President Raphael Bostic will take part in an armchair chat at The Buckhead Club in Atlanta at 11:30 a.m. Eastern.
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