Facebook sends Nasdaq tumbling, but trade optimism boosts Dow

NEW YORK (Reuters) - A plunge in Facebook Inc's FB.O shares pushed the Nasdaq down more than 1 percent on Thursday, the index's biggest one-day drop in a month, but industrial stocks rose after the United States and the European Union said they would negotiate on trade.

Facebook shares dived 19.0 percent, their biggest ever one-day percentage drop, after the social media giant forecast years of lower profit margins. The decline in Facebook shares weighed on the S&P 500 technology index .SPLRCT, which dropped 1.6 percent.

Shares of Inc AMZN.O, another member of the so-called FANG group of momentum stocks, fell 3.0 percent and were the second-biggest drag on the Nasdaq and S&P after Facebook. In after-hours trading, they were modestly positive in volatile trading following the company's quarterly results.

Shares of Twitter Inc TWTR.N, scheduled to report its quarterly results on Friday, slid 2.9 percent.

But while the Nasdaq and the S&P 500 slumped, the Dow rose, in part on the strength of industrial stocks. Industrials, which have been a bellwether of trade tensions, were lifted after U.S. President Donald Trump and European Commission President Jean-Claude Juncker agreed to work to resolve U.S. tariffs on steel and aluminum and Europe’s retaliatory duties.

S&P 500 energy stocks .SPNY also advanced, ending the session up 1.0 percent, as oil prices rose on the disruption of some of Saudi Arabia's oil shipments.

“What we’re seeing is the market broadening out, which is healthy,” said Quincy Krosby, chief market strategist at Prudential Financial in Newark, New Jersey. “We need to see a rotation take place when the leadership is under pressure, and the high-flying tech names have been in the leadership position.”

FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., July 24, 2018. REUTERS/Brendan McDermid

The Dow Jones Industrial Average .DJI rose 112.97 points, or 0.44 percent, to 25,527.07, the S&P 500 .SPX lost 8.63 points, or 0.30 percent, to 2,837.44 and the Nasdaq Composite .IXIC dropped 80.05 points, or 1.01 percent, to 7,852.19.

Another drag on the S&P and Nasdaq was Biogen Inc BIIB.O, whose shares tumbled 10.2 percent as trial data from its Alzheimer's drug failed to impress investors.

McDonald's Corp MCD.N shares dipped 1.7 percent after the fast-food chain missed U.S. same-store sales estimates for the first time in at least two years.

Chipmakers, however, were a bright spot amid Thursday's declines. The Philadelphia SE Semiconductor Index .SOX rose 1.9 percent.

Shares of Advanced Micro Devices Inc AMD.O jumped 14.3 percent and Xilinx Inc shares XLNX.O climbed 9.6 percent after both companies reported robust quarterly results.

Shares of Qualcomm Inc QCOM.O gained 7.0 percent after the chipmaker pulled its $44 billion bid for NXP Semiconductors NV NXPI.O upon failing to win Chinese regulatory approval. NXP shares dropped 5.7 percent.

Supervalu Inc SVU.N shares surged 65.4 percent after United Natural Foods Inc UNFI.O agreed to buy the supermarket operator in a $2.9 billion deal. United Natural Foods shares sank 16.3 percent, however.

Advancing issues outnumbered declining ones on the NYSE by a 1.33-to-1 ratio; on Nasdaq, a 1.21-to-1 ratio favored advancers.

The S&P 500 posted 52 new 52-week highs and five new lows; the Nasdaq Composite recorded 112 new highs and 73 new lows.

Volume on U.S. exchanges was 7.05 billion shares, compared with the 6.06 billion-share average for the full session over the last 20 trading days.

Reporting by April Joyner; Additional reporting by Amy Caren Daniel in Bengaluru; Editing by Shounak Dasgupta, Susan Thomas and Jonathan Oatis