Wall Street advances on energy bump; Facebook woes continue

Reuters March 20 | Updated on March 21, 2018 Published on March 21, 2018

US stocks advanced modestly on Tuesday as higher oil prices lifted the energy sector, but another slump in Facebook Inc shares curbed gains.

Oil prices rose more than 2 per cent to touch a three-week high, driven by tensions in West Asia and the possibility of further declines in Venezuelan crude output. Those gains helped the S&P energy index rise 0.84 per cent, making it easily the best performing of the 11 major S&P 500 sectors.

Facebook Inc shares ended down 2.6 per cent, well above earlier lows. The social media company had said on Tuesday it faced questions from the US Federal Trade Commission about how its users’ personal data was mined by a political consultancy hired by President Donald Trump’s campaign.

The stock has fallen about 9 per cent over the past two sessions, its biggest two-day decline since February 2016, a drop that has weighed heavily on equities.

US and European lawmakers have demanded an explanation of how the consultancy, Cambridge Analytica, gained access to the data and why Facebook failed to inform its users, raising broader industry questions about consumer privacy and whether tougher regulation is on the horizon.

“The negative part would be they are going to haul them in front of Congress now and well see do they create new laws, are there new regulations that could stunt the growth of the company? That is really what the fear is,” said Joe Saluzzi, co-manager of trading at Themis Trading in Chatham, New Jersey.

Facebook was not the only social media stock or fund taking a hit on Tuesday. Shares of Snap Inc fell 2.56 per cent, while Twitter Inc shares tumbled 10.38 per cent. The Global X Social Media ETF lost 0.9 per cent.

The Dow Jones Industrial Average rose 116.36 points, or 0.47 per cent, to 24,727.27, the S&P 500 gained 4.02 points, or 0.15 per cent, to 2,716.94 and the Nasdaq Composite added 20.06 points, or 0.27 per cent, to 7,364.30.

Oracle dropped 9.4 per cent after the business software maker reported lower-than-expected quarterly revenue.

Fed meet

Financial stocks edged up 0.21 per cent as investors awaited a near-certain interest rate hike at the end of the Federal Reserve’s two-day meeting on Wednesday.

Market participants largely expect a total of three rate hikes this year, although some have not ruled out the possibility the US central bank will hike four times.

“We are finally normalising, after years we talked about the Fed holding it down and the market only going up because of the Fed. Now lets see what the market can do can it stand on its own two legs?” said Saluzzi, referring to the low interest rate environment the Fed put into effect after the financial crisis.

Volume on US exchanges was 6.26 billion shares, compared with the 7.17 billion average for the full session over the last 20 trading days. Declining issues outnumbered advancing ones on the NYSE by a 1.28-to-1 ratio; on Nasdaq, a 1.26-to-1 ratio favoured decliners.

Published on March 21, 2018
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