Technology stock selling fuelled losses on US markets yesterday (Wednesday December 9), following the record highs achieved earlier in the week.
The tech-dominated Nasdaq Composite, the S&P 500 and the Dow Jones Industrial Average all ended the day lower. The move away from technology shares suggested investors were returning to sectors that have been severely affected by the coronavirus pandemic, in the hope that further fiscal stimulus from Congress and the widespread rollout of a vaccine will support economic recovery in 2021.
In Europe, meanwhile, markets opened higher today, despite the admission that there are still "very large gaps" between the UK and the EU in last-minute Brexit negotiations.
Tech suffers as Facebook sued
The Nasdaq witnessed the biggest losses on Wall Street yesterday, closing more than 1.9% down.
All of the key players in the big tech sector saw their stock values drop, with both Amazon and Apple falling by more than 2%. Google and Microsoft also witnessed losses of around 1.9%.
Facebook shares were down by the same amount as the social media giant was hit with lawsuits from US federal regulators and more than 45 state prosecutors. The legal action accuses the company of unfairly stifling competition by acquiring other social media brands like Instagram and WhatsApp.
Jennifer Newstead, the firm's general counsel, said the deals being scrutinised had been approved years ago and the government "now wants a do-over". She claimed this sends "a chilling warning to American business that no sale is ever final".
"Antitrust laws exist to protect consumers and promote innovation, not to punish successful businesses," Facebook said.
Michael McCarthy, chief strategist at CMC Markets, told Reuters: "The fall in tech stocks was a bit of a concern, given that they've risen in all market weather over the last six weeks, so to see them come off might signal that we're looking at a short-term corrective move."
The S&P 500 was down by around 0.8% yesterday, while the Dow Jones fell by 0.35%. The losses came after the S&P registered its 30th record close of the year on Tuesday, while the Nasdaq saw its 50th closing high.
Brexit remains 'very difficult'
In Europe, Brexit has continued to dominate the headlines this week, as negotiating teams from the UK and the EU pressed ahead with their attempts to break the current deadlock before the transition period ends on December 31. If a trade agreement isn't finalised in the coming weeks, the UK will leave the bloc without a deal on January 1 2021.
UK prime minister Boris Johnson travelled to Brussels for a face-to-face meeting with European Commission president Ursula von der Leyen yesterday, but there was little sign of progress by the end of the evening.
Downing Street said the leaders had a "frank discussion about the state of play" and "acknowledged that the situation remained very difficult and there were still major differences between the two sides".
Chief negotiators David Frost and Michel Barnier will continue their negotiations over the coming days. Sunday December 13 has been earmarked as the deadline for a "firm decision" to be made about the future of the talks.
Despite the ongoing uncertainty around Brexit, European markets registered marginal gains on Thursday morning.
France's CAC 40 gained 0.2%, while Germany's DAX index saw a choppy morning trading session but stayed in the green going into the afternoon.
In the UK, the FTSE 100 jumped by 0.5% at the open and was more than 0.7% higher towards the end of the morning.
The increase on the London index came despite economic data showing that the UK's recovery from the pandemic continued to slow in October. GDP grew by just 0.4% during the month and the economy remains well below the size it was before the health crisis.
Lockdown restrictions in the spring led to a record contraction of 19.5% in April. November's figures are also expected to show a drop in output as a result of the latest measures to control the second wave of Covid-19 infections.