Tech has lost 5.4 percent over the past three sessions after mixed results from some of the largest companies in the sector. Facebook reported weaker-than-expected revenue last week and disappointing global daily active users, a key metric for the company. Twitter, meanwhile, posted fewer-than-expected monthly users for the previous quarter.
“Facebook is the poster child for the recent Tech stock decline,” said Nicholas Colas, co-founder of DataTrek Research, in a note. “While its competitive advantage remains robust, expected returns on capital are lower than before last week’s earnings release (higher costs to fix the platform) and growth rates for capital deployed are also suspect.”
These results have led some investors to lose faith in the so-called FANG trade, which is responsible for the lion’s share of the S&P 500’s gains this year.
The corporate earnings season continued on Tuesday with Dow components Procter & Gamble and Pfizer reporting better-than-expected earnings. Shares of Procter were up 0.3 percent, while Pfizer’s stock gained 3 percent.
Apple, another Dow component, is scheduled to report Tuesday after the close.
About 60 percent of the S&P 500 has released its quarterly results, with 82 percent of those companies posting better-than-expected earnings, according to Thomson Reuters I/B/E/S.
“Do you remember all the pundits who warned 1Q 2018 earnings were at their peak? Well, the 2Q 2018 numbers for these 299 S&P 500 companies that have reported are better than how they reported last quarter in terms of year-over-year sales and earnings growth. There are also more companies beating estimates this quarter as well,” Nick Raich, CEO of The Earnings Scout, wrote in a note.
The Federal Reserve started a two-day monetary policy meeting on Tuesday, with an announcement scheduled for Wednesday. Investors are not expecting a rise in interest rates, however, but discussion on trade or where the Federal Reserve is thinking of heading could be talked about.
The meeting follows the publication of much economic data and the news that President Donald Trump was “not thrilled” about rising interest rates, expressing concern that the Fed could upset the economic recovery.
—CNBC’s Patti Domm contributed to this report.