The five biggest tech companies, including Facebook, account for about 20 percent of the S&P 500’s value, meaning their declines have a stronger impact on the index.
Technology stocks — which have proved sensitive to changing views on interest rates — have already been contending with a sell-off since the start of the year. Traders are feeling discouraged to invest in riskier assets, like stocks, because higher interest rates impede the potential for larger returns in the future. The S&P 500 is down about 6.1 percent this year.
Also lower on Thursday was Spotify, which tumbled 16.8 percent after the company said it expected subscriber growth to slow in 2022, and said it would “no longer plan to issue annual guidance.” The audio streaming platform said it did not expect the number of premium users to be affected by the controversy over accusations that its most popular personality, Joe Rogan, had used his podcast to spread misinformation about Covid-19 and vaccines.
The sell-off on Thursday ended a four-day rebound for stocks, which had been bouncing back from a plunge in January. That drop had more to do with concerns about the economy, and what higher interest rates mean for businesses, consumers and stock investors — as the Federal Reserve gears up to start increasing borrowing costs to cool down inflation.
On the economic front, the Labor Department reported another dip in initial jobless claims on Thursday, falling 23,000 to 238,000 last week. The data signals the Omicron wave is receding.
But the major economic news for the week will be the jobs report on Friday, which will offer a more detailed look at hiring in January — when the latest coronavirus wave was at its most disruptive. Highlighting the uncertainty around this month’s report, forecasts range from a gain of 250,000 jobs during the month to a loss of 400,000.
Economists see the January jobs report as an anomaly because a slew of measurement issues, data quirks and the Omicron wave mean it doesn’t offer a clear picture of the state of the labor market. Still, with the Fed now focused on inflation data and wage growth as it tries to assess how to best move forward with its plans to raise interest rates, the data will be closely scrutinized.