Look Beyond the FANGs

By Randall W. Forsyth July 27, 2018 12:56 p.m. ET

Poof! David Copperfield, meet Mark Zuckerberg. Instead of making a jetliner disappear on a Las Vegas stage, the chief executive of Facebook made $119 billion evaporate from the social-media giant’s stock-market value on Thursday after uttering some less-than-encouraging words about future growth and expenses.

Our colleagues at Dow Jones Data Strategy observed that not only was this the biggest drop in market cap ever, but it was larger than the market values of 457 of the S&P 500 companies. Yet the ripple through the overall stock market was relatively small, as Wilshire Associates estimated U.S. equities lost only $75 billion that day. And Facebook’s (ticker: FB) drop only brought the shares back to where they were last May, and still above the levels they reached in early Spring after the Cambridge Analytica revelations.

By Friday the damage seemed more widespread, especially in the Nasdaq. The tech-heavy index slumped 1.5%, leaving it down 1.1% for the week. The S&P 500 did manage to end the week in the plus column by 0.6% while the Dow Jones Industrial Average benefited from its lack of new tech to add 1.6% for the week.

Markets took less of a cue from macro factors. The as-expected strong second-quarter gross-domestic-product report showing 4.1% inflation-adjusted annual growth had scant impact, as markets saw through some of the special factors, notably a surge in soybean exports to beat Chinese tariffs imposed in retaliation for U.S. tariffs. While the June quarter was the strongest in 10 years, that performance was enhanced by fiscal stimulus and still-accommodative monetary policy with short-term interest rates at or below inflation, depending on

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