USA stocks rebound, Facebook continues to tumble

Dow drops more than 300 points

Dow drops more than 300 points

US stocks ended slightly lower on Wednesday, with major indexes giving up gains in choppy trade after the Federal Reserve raised USA interest rates, while a strong gain in the energy space helped limit losses.

The selloff wiped some US$50 billion off the value of social media giant Facebook, leaving investors on edge as the Federal Reserve prepares to raise U.S. rates for the first time this year.

Markets participants are still trying to decipher the number of rate hikes this year - whether the Fed will stay at three increases as previously forecast by policy makers, or whether a fourth hike is possible.

Investors were also spooked by signs of a brewing global trade war after the Wall Street Journal reported that China was planning counter-measures against USA trade tariffs.

The collapse in Facebook shares dragged the entire technology sector on the first day of the week, which put pressure on the rest of the market as well.

Y, which benefit from a higher rate environment, briefly extended gains in the wake of the announcement but lost ground to close down 0.03 percent.

"It's a general pullback in risk and technology tends to have a higher impact on the market".

US stocks sank about 2 percent on Monday, with the Dow Jones Industrial Average shedding almost 400 points, as Facebook led a selloff in technology stocks on reports that the social media company's user information was misused.

The WSJ report fuelled some buying of German bonds, pushing the 10-year yield off the day's highs.

Few economists expect new Fed chair Jerome Powell to alter the trajectory of the bank's anticipated rate path, but as it is his first meeting at the helm, investors have been somewhat on edge as the meeting approaches.

China, according to the Wall Street Journal, was planning counter-measures with tariffs aimed at US agricultural exports from Farm Belt states. "But if we see retaliation, and significant trade disruptions, it's a different order of magnitude (which) could begin to affect global growth forecasts", said Andrew Milligan, head of global strategy at Aberdeen Standard Investments. The yield was just one basis point higher on the day at 0.59%.

An increase would mark its sixth hike since late 2015 when the US central bank started gradually tightening monetary policy following a period of near-zero interest rates in the aftermath of financial crisis in 2008.

Fears of a trade war have also weighed on commodity prices, though tensions in the Middle East supported oil prices on Wednesday. Its shares were down 1.5 percent in premarket trading, on track for its third day of losses amid uproar over the alleged misuse of users' data. Facebook Inc. (FB) shares slumped 2.5% as global regulators turned up the heat on the social network company. The Nasdaq Composite dropped 15.35 points, or 0.21 percent, to 7,348.95.

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