The Nasdaq skidded 2%, while the S&P 500 lost 1.3%. The Dow Jones industrial average fell 1.1%. Small caps didn’t escape damage as the Russell 2000 dropped 1.2%.
Volume in the stock market today was running lower compared to the same time Friday. This was no surprise, considering Friday was an options and futures expiration day, which normally boosts turnover.
The S&P 500 slumped under its 50-day line, but the Nasdaq remained above the key support level.
Facebook gapped down 7% on reports that data on millions of Facebook users were passed on without users’ consent to Cambridge Analytica, a data mining and analysis firm.
The drop pulled Facebook under its 50-day moving average. Facebook already had been showing signs of trouble. As noted in the March 8 Big Cap 20 column, the stock’s relative strength line — which gauges performance vs. the S&P 500 — had been moving sideways since August.
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Tech and internet stocks were generally having a rough time in midday trade. Qualcomm gapped down 3.5%, while Alphabet also gapped down 3.7%.
Finding winners was a challenge. Among IBD’s 197 industry groups, losers led winners by a 13-1 ratio.
Banks And The Fed
The bank sector, though, was holding just under flat for the day.
The Federal Reserve will meet Tuesday and Wednesday. The CME Group’s FedWatch Tool pegs the odds of a quarter-point interest rate increase at 93%. A month ago, odds were at 81.7%. Higher rates are expected to help the banks’ net-interest margins.
Although the good news for banks could already be priced into the stocks, some reports suggest this might not be so. As shown on Page A19 in IBD Weekly, the A+ rated Fidelity Advisor Equity Growth (FAEGX) and A+ rated Fidelity Trend (FTRNX) include banks in their top new buys and in their 10 largest holdings.
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