Overnight Bounce in Tech Gives Way as PayPal, Nvidia Lead Drop

(Bloomberg) -- Optimism fueled by an overnight rebound in Facebook Inc. proved short-lived in the broader market as benchmark indexes declined, dragged down by weakness in PayPal Holdings and Nvidia Corp.

After falling then recovering in the overnight session, the main ETF tracking the Nasdaq 100 Index was again down, losing 0.3 percent at 9:40 a.m. in New York. The slip left it at risk of its worst weekly retreat since June. The tumble -- almost 1 percent from its pre-market high -- comes hours before Apple Inc., Amazon.com Inc. and Alphabet Inc. are scheduled to report.

Volatility is rising in computer and software makers. An options-derived gauge of turbulence in the Nasdaq 100 Index touched its highest level Tuesday since the election of President Donald Trump. Along with uneven quarterly results, investors are dealing with stiffening resolve among Federal Reserve policy makers toward inflation and the highest bond yields in four years.

Weakness Thursday was driven by PayPal, which fell 8.2 percent; Nvidia, which lost 2.1 percent3nt and Netflix, which lost 0.3 percent.

Apple was down 0.2 percent, falling for the third time this week, amid concerns about sales of its flagship iPhone abound. Deutsche Bank said in a note late Monday that the iPhone X is too expensive and Wall Street expectations for fiscal second and third quarters are overly optimistic.

Facebook rose 2.1 percent, paring a gain of as much as 3,.5 percent. Sheryl Sandberg, Facebook’s chief operating officer, said the company’s advertising business is “strong,” despite weakness in key areas -- time spent and average daily users. Fourth-quarter sales rose 47 percent year-over-year to $12.97 billion, topping estimates. The stock initially fell as much as 5.2 percent in after-hours trading after the company reported a drop in time spent by users on the site and the first-ever decline in North American daily users.

Microsoft results were buoyed by brisk demand for online versions of its productivity programs, including Word and Excel, and the company’s business of selling storage and other computing tasks in its own data centers. Sales in the fiscal second quarter climbed 12 percent to $28.9 billion, exceeding the average analyst estimate of $28.4 billion.

The stock was down 0.4 percent Thursday morning.

EBay Inc. gave an optimistic revenue forecast for the current quarter, boosting investor confidence in the company’s efforts to generate more traffic on the site. Gross merchandise volume, a key metric, rose 10 percent to $24.4 billion in the fourth quarter, the company said Wednesday, as the number of active buyers on the platform increased. The stock was up 13.1 percent.

Some of the other big tech companies reporting Wednesday struck a more somber tone.

Qualcomm Inc., a key Apple supplier, gave revenue and profit forecasts that underscored weakening demand for smartphones. Sales will be $4.8 billion to $5.6 billion in the current quarter, while analysts are predicting revenue of $5.6 billion. Earnings per share, excluding some items, will be 65 cents to 75 cents, short of the 86 cents predicted by analysts. The shares fell 1.3 percent.

Apple, which has forecast revenue of $84 billion to $87 billion for the quarter that ended in December, has been dogged by supply chain reports indicating weaker-than-anticipated demand for its 10th anniversary iPhone.

©2018 Bloomberg L.P.