After having staged a remarkable recovery following the jobs report last week, the markets declined yet again on Thursday, and the S&P500 index lost as much as 5.9%. However, amidst all that, Facebook Inc (NASDAQ:FB) suffered a comparable decline as well, and the tech stock recorded a decline of as much as 5.2%.
Markets Turn Volatile
Hence, it could be worthwhile to take a closer look at what actually transpired on Thursday. The biggest trigger for the fall in the markets yesterday was due to the negative sentiments expressed by Jerome Powell, the Chairman of the United States Federal Reserve.
In addition to that, there are growing fears that a second wave of the coronavirus pandemic might hamper the economic turnaround. Over the course of the last week, the number of coronavirus cases has increased on a daily basis in the states of Arizona, California, Florida, and Texas. Facebook’s business is almost wholly dependent on advertising revenues, and ad spending is directly related to the strength of the broader economy.
For instance, Facebook’s ad revenues declined in March due to the pandemic and the associated lockdowns. Another lockdown could result in more pain for businesses, and the advertising budgets are also going to get smaller.
However, that was not the only reason why the stock declined. The company was also involved in a war of words with Joe Biden’s campaign. The campaign asked the company to do more with regards to misinformation on its platform. Facebook responded that it is going to protect political speech even if the company does disagree with the content.
The company also cited the executive order from President Donald Trump that forbids companies from fact-checking social media posts and stated that the company is going to respect those rules. These run-ins are only expected to get more intense as the election approaches. On the other hand, it should be noted that the markets had rallied strongly last week, but there are still plenty of weaknesses in it.