Social Media Stocks Crash

US stocks retreated on Friday, snapping a three-day winning streak, as some surprisingly weak quarterly updates from companies spooked investors.

The S&P 500 fell 37.32 points, or 0.9%, to 3961.63 a day after the broad benchmark index jumped 1%. The Dow Jones Industrial Average edged down 137.61 points, or 0.4%, to 31899.29, and the Nasdaq Composite declined 225.50 points, or 1.9%, to 11834.11. Despite Friday’s losses, all three indexes posted weekly gains.

Shares of social media firms fell sharply on Friday after Twitter and Snapchat’s owner signaled advertisers had tightened their purse strings in response to a darkening economic outlook.

Pinterest plunged 11.3%, Facebook-owner Meta Platforms  dropped 5.6%, Google-owner Alphabet Inc (GOOGL.O), which also sells ads online, fell 3.3%.

At current prices Pinterest, Meta, Twitter, Alphabet and Snap were collectively set to lose about $42 billion in market value.

Twitter also blamed its ongoing battle to close its $44-billion acquisition by Elon Musk for the surprise fall in quarterly revenue. The micro-blogging site’s shares were down 0.1% in choppy trading.

Advertisers have pared back spending amid rising interest rates and surging inflation as some of them struggle with labor shortages and supply chain disruptions, Snap Inc said on Thursday.