Weak forecasts from tech companies including LinkedIn and worries about lofty valuations sends Wall St lower to end the week.
NEW YORK, NEW YORK, UNITED STATES (FEBRUARY 5, 2016) (NYSE) – The Nasdaq closed at its lowest since October 2014 on Friday, leading a selloff on Wall Street following weak forecasts from technology companies including LinkedIn.
LinkedIn dropped 43.6 percent to $108.38, a day after the company’s revenue forecast missed estimates.
Business analytics company Tableau Software lost half its market value and its shares hit an all-time low a day after it cut its full-year earnings forecast. Its shares ended down 49.4 percent at $41.33.
Big tech names also sank, including Facebook, which dropped 5.8 percent to $104.07. Alphabet fell 3.6 percent to $703.76 and Amazon slid 6.4 percent to $502.13. Netflix was down 7.7 percent at $82.79.
Stocks like Amazon and Netflix, which both more than doubled in price last year, have been favorites with hedge funds. Friday’s action may suggest some hedge funds may be taking a harder look at valuations.
“I think that come 2017, with the labor market continuing to tighten, I think you will feel price pressures from stronger wage growth. For that reason, I think that the decision to raise rates last month or December was a reasonable one. I’m actually thinking that the market is underestimating hikes for the rest of the year. I wouldn’t be surprised if we’ll see two or maybe even three more hikes in 2016,” said Gav Levanon, Managint Director at The Conference Board.
The Dow Jones industrial average closed down 211.75 points, or 1.29 percent, to 16,204.83, the S&P 500 lost 35.43 points, or 1.85 percent, to 1,880.02 and the Nasdaq Composite dropped 146.42 points, or 3.25 percent, to 4,363.14.
Friday’s January jobs report nonfarm payrolls increased by 151,000 jobs, below the 190,000 expected by economists polled by Reuters as the boost to hiring from unseasonably mild weather faded. But strong wage growth and falling unemployment suggested a March interest rate increase could not be completely ruled out.
Declining issues outnumbered advancing ones on the NYSE by 2,330 to 720, for a 3.24-to-1 ratio on the downside; on the Nasdaq, 2,288 issues fell and 509 advanced for a 4.50-to-1 ratio favoring decliners.
The S&P 500 posted 7 new 52-week highs and 26 new lows; the Nasdaq recorded 3 new highs and 195 new lows.