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Bears drag down indices

US equity benchmarks predictably pulled back on Thursday, February 3. Bullish sentiment faded as market participants as selling of risk-sensitive assets resumed. The prerequisites are in place for the medium-term downward trend to continue, ranging from highest US inflation rate in the past 40 years, to a turnaround in the Fed's monetary policy. At this point, anything could serve as a pretext for selling to continue, but the bears chose the stagnation of IT giant Meta (Facebook) as their trump card.

The slump in this mega-cap name led the whole high-tech sector lower. The Nasdaq recorded its steepest one-day losses in two years, down over 3.5%. The broad-based S&P 500 also recorded its worst losses in a year, shedding 2.5%. The DJIA posted the smallest decline, off 1.5% on the day.

Closes

NASDAQ Composite: 13,878 (-3.74%)

S&P 500: 4,477 (-2.44%)

DJIA: 35,111 (+0.63%)

SPX 500 CFDs are attempting to rebound in pre-market trading after yesterday’s downturn. Selling is likely to resume in the medium-term. The next downside target is 4,450-4,400 (see below the CFD chart on the SPX 500 from MT4).

Market news

The CBOE Volatility Index (VIX), which tracks S&P index options, spiked 10.23% to 24.35.

Corporate news

Meta Platforms (Facebook) tanked 23% after releasing quarterly financial results, erasing about $200 bln of its market cap.

This is the third major company after Netflix and Paypal, which saw one fifth of its capitalization wiped out after reporting quarterly results. Investors now await Amazon’s earnings, which are due out later today.

Coca-Cola soared to an all-time high of $61.61, up 0.70% on the day. 

Activision Blizzard rose 0.61% despite weak 4Q21 financial results. Investors did not react to the report due to the upcoming takeover of the company.

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