Stocks are tumbling as Tencent's brutal earnings report reminds traders of Facebook's growth woes

Markets Insider

• US stocks tumbled Wednesday after Chinese tech giant Tencent reported its first profit decline in almost 13 years, putting pressure on the US tech sector.
• Investors are watching tech especially closely for signs of a growth slowdown after Facebook said it had peaked for the year during a disastrous earnings report.
• Follow the tech-heavy Nasdaq 100 index.

US stocks tumbled Wednesday after Chinese tech giant Tencent reported its first profit decline in almost 13 years, putting pressure on the mega-cap US tech firms that have led the market higher in recent months.

Tencent's earnings shock is likely reminding investors of Facebook's similarly jarring quarterly report from late July, when the company missed revenue targets and predicted slowing future growth.

That disaster wound up costing Facebook $120 billion in market value over the course of a single day - the biggest wipeout in US stock-market history.

The broader issue at hand is the perception that the mega-cap tech juggernauts so responsible for the market's climb to near-record levels are becoming vulnerable. When doubts emerge over their ability to keep growing at such a fast pace, it can result in sharp selling.

The tech-heavy Nasdaq 100 led market-wide losses in the US, dropping as much as 1.9% at its intraday low. Meanwhile, the Dow Jones industrial average fell as much as 1.3% - or 334 points - while the benchmark S&P 500 slipped 1.3% at its daily low.

The NYSE Fang+ Index, which contains 10 of tech's heaviest hitters worldwide, fell more than 2.8%. Here's the damage, listed in decreasing order of losses.

• Netflix (-4.4%)
• Tesla (-3.9%)
• Alibaba (-3.5%)
• Twitter (-3.4%)
• Facebook (-2.5%)
• Baidu (-2.2%)
• Alphabet (-2%)
• Amazon (-1.6%)
• Nvidia (-1.6%)
• Apple (-0.5%)

Raw-material manufacturers in the S&P 500 also declined more than 2% on Wednesday. Twenty-three of the 24 companies in the sector fell on the day, led by Freeport McMoRan (-9.1%) and Newmont Mining (-5.6%).

Now read:

• 'Tech trendiness' has spiked to the highest level in 15 years - a Wall Street investment chief explains why that's signaling widespread market pain
• There's a $1 trillion question hanging over stocks right now - and the answer could determine the ultimate fate of the market
• One dirty word keeps popping up as Wall Street weighs the next market crash - and it should strike fear into the hearts of investors everywhere