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US open: Stocks go green even as Facebook concerns loom over tech sector
Trading on Wall Street opened strong on Tuesday after the heavy losses seen during the previous session, with the tech sector still in focus following the latest revelations regarding Facebook that sparked concerns of tighter regulatory controls.
At 1500 GMT, the Dow Jones Industrial Average was up 0.54%, while the S&P 500 and Nasdaq had picked up 0.18% and 0.20%, respectively.
In the background, the Federal Reserve's two-day policy meeting was getting underway, with markets having already priced -in a 25 basis points interest rate hike but still awaiting the latest so-called 'dot plot' projections from US rate-setters for a better guide as to how many more rate increases are on the cards for this year.
David Morrison, senior market analyst at GKFX, said: "US stock index futures were rallying ahead of the open and pointing to a firmer start for equities. Nevertheless, yesterday's sharp sell-off may have done some technical damage to US markets, indicating a significant shift in sentiment amongst investors. The Dow's losses meant the index has now lost ground over the course of the year while the S&P 500 has slumped below both it's 50 and 100-day simple moving averages. Yet the tech-heavy NASDAQ 100 still looks remarkably resilient, despite it suffering the heaviest losses in percentage terms yesterday after Facebook shares slumped.
"But investors look likely to remain cautious ahead of the release of the Fed's rate statement tomorrow and the FOMC's quarterly Summary of Economic Projections. There's concern that members of the FOMC may raise their forecasts for future rate hikes. That could see US Treasury yields spike higher and this would weigh on equities going forward."
On the corporate front, after losing nearly $40bn of its market cap on Monday when it emerged that data company Cambridge Analytica - which was used by Donald Trump's presidential campaign and by Brexiters in the EU referendum - improperly harvested information from 50m Facebook users, the social media giant's shares were again coming under intense selling pressure on Tuesday, with its stock sliding a further 4.50% broader tech sector.
Chris Beauchamp, chief market analyst at IG, said: "The big worry will be whether the Facebook news will widen into a larger investigation and as result, the dip buyers will stay their hand for the time being."
Elsewhere, Oracle Corp tumbled 9.34% as its quarterly earnings report released late on Monday left investors disappointed, while MGM Holdings picked up 0.22% after it announced that chairman and chief executive Gary Barber had been fired.