By Anora Mahmudova and Wallace Witkowski, MarketWatch

Facebook shares drop more than 5%, weighing on main indexes

U.S. stocks shed early gains Thursday, with the S&P 500 threatening to extend its longest losing streak in five years and investors grappled with mixed economic data and earnings, as well as growing uncertainty about the tightening presidential race.

A number of economic reports, including jobless claims, productivity data, factory orders and the nonmanufacturing ISM survey, largely underlined a theme of steady economic growth and were seen as strong enough to justify expectations for the Federal Reserve to raise interest rates at its December meeting. The central bank kept interest rates unchanged Wednesday, but signaled that it's inching closer to a December interest-rate hike (http://www.marketwatch.com/story/fed-doesnt-need-to-see-much-more-evidence-before-raising-interest-rates-2016-11-02).

The S&P 500 fell 6 points, or 0.3%, to 2,092, with six of the main 11 sectors trading lower. The tech and health care sectors led the decliners. Earlier, the index had been up nearly 5 points.

On Wednesday, the S&P 500 closed lower for the seventh session in a row, notching its longest losing streak in five years (http://www.marketwatch.com/story/us-stocks-under-pressure-as-tighter-election-race-rattles-investors-2016-11-02), with analysts suggesting the tightening race for the U.S. presidency is unsettling investors.

"The market is acting uneasy, restless and nervous, which is why we are seeing a measured drift with weak undertones. Investors are not scared, but on top of who might win, there is uncertainty about whether the results would be accepted," said Michael Antonelli, equity sales trader at Robert W. Baird & Co.

The Dow Jones Industrial Average declined 9 points, or 0.1%, at 17,950, with shares of Intel Corp. (INTC) and Pfizer Inc.(PFE) dragging on the average, and 16 out of the 30 components trading lower. Earlier, the average had been up as many as 47 points.

The Nasdaq Composite fell 38 points, or 0.8%, at 5,067, as sharp losses in Facebook, one of its largest components, limited gains. Earlier, the index had been up by nearly 10 points.

Shares in Facebook(FB) dropped 5.9% after the social-media giant warned (http://www.marketwatch.com/story/facebook-needs-its-big-bets-to-pay-off-soon-after-spooking-investors-2016-11-02) late Wednesday that growth rates for its advertising revenue will "come down meaningfully." The stock's drop also limited the S&P's gain.

The White House race continued to be a key factor.

"Based on the latest polls, Hillary Clinton is still favored to win, but the margin of victory has narrowed. Assuming the baseline scenario of a Clinton presidency and Republican majority in the House, we think the coast will be clear for the Fed to deliver a hike in December," wrote analysts at Bank of America Merrill Lynch.

"Markets remain very much focused on the outcome of next week's U.S. presidential election," said Tony Cross, market analyst for TopTradr, in a note.

"Donald Trump's turnaround in the opinion polls is being taken seriously by financial markets, with short USD positions building and a breakdown in U.S. equity markets being observed, too."

"Short USD positions" refers to bets against the dollar, and a key index for the buck traded down modestly Thursday, stretching its weekly decline to 1.2%.

HClinton's lead in a RealClearPolitics average of polls fell back to 1.7 points (http://www.realclearpolitics.com/epolls/2016/president/us/general_election_trump_vs_clinton-5491.html) Thursday. Clinton's lead is down sharply from about 7 points in mid-October.

See also:5 reasons stocks will rally after the presidential election (http://www.marketwatch.com/story/five-reasons-stocks-will-rally-after-the-us-presidential-election-2016-11-03)

Individual movers: On the upside, natural gas producer (http://www.marketwatch.com/story/chesapeake-energys-stock-soars-after-surprise-adjusted-profit-2016-11-03)Chesapeake Energy Corp.(CHK) shares rose 3.6% after quarterly results, while cosmetics seller (http://www.marketwatch.com/story/avon-swings-to-profit-but-revenue-hurt-by-dollar-2016-11-03)Avon Products Inc.(AVP) shares declined 1.3% despite better-than-expected profits.

Whole Foods Market Inc.(WFM) advanced 0.9% after the grocery chain late Wednesday announced better-than-expected profit (http://www.marketwatch.com/story/whole-foods-shares-rise-after-earnings-beat-dividend-hike-2016-11-02), a dividend hike and the elimination of its dual-CEO structure (http://www.marketwatch.com/story/john-mackey-to-be-sole-ceo-of-whole-foods-market-2016-11-02), leaving co-founder John Mackey as sole boss.

Games maker Zynga Inc.(ZNGA) shares rose 1.8% despite missing earnings and revenue estimates (http://www.marketwatch.com/story/zynga-posts-loss-as-number-of-active-users-dips-2016-11-02).

On the downside, fitness-tracker seller Fitbit Inc.(FIT) plunged 31% after results and outlook came in below Wall Street's expectations (http://www.marketwatch.com/story/flex2-manufacturing-issues-will-hurt-fitbits-holiday-season-2016-11-02)GoPro Inc. (GPRO) shares fell in tandem with Fitbit's (http://www.marketwatch.com/story/gopros-stock-tumbles-with-fitbit-as-investors-position-ahead-of-earnings-2016-11-03), falling 4.6% ahead of earnings.

First Solar Inc.(FSLR) shares dropped 16% following a downgrade from Oppenheimer.

Wynn Resorts Ltd.(WYNN) shares fell 9.5% after the casino operator missed Wall Street earnings targets for the quarter.

Other markets: The pound jumped to an almost four-week high (http://www.marketwatch.com/story/pound-leaps-after-court-delivers-blow-to-uks-brexit-plan-2016-11-03) against the dollar on Thursday after a U.K. court ruled the government can't trigger the Brexit process without approval from parliament.

See:Brexit ruling: 5 things you need to know (http://www.marketwatch.com/story/brexit-ruling-5-things-you-need-to-know-2016-11-03)

Oil futures (http://www.marketwatch.com/story/oil-rises-as-doller-falls-but-sentiment-still-weighed-by-higher-inventories-2016-11-03) settled down 1.5% at $44.66 a barrel. European stocks traded higher, while Asian markets closed mixed. Gold futures (http://www.marketwatch.com/story/gold-drops-below-1300-as-stocks-stabilize-2016-11-03) settled down 0.4% at $1,303.30 an ounce, paring their gains for the week.

Economic news:The number of people who applied for unemployment benefits (http://www.marketwatch.com/story/jobless-claims-hit-3-month-high-of-265000-2016-11-03)at the end of October rose by 7,000 to a three-month high of 265,000, but the rate of layoffs in the U.S. remains extremely low.

Meanwhile, American firms and employees boosted their productivity (http://www.marketwatch.com/story/us-productivity-surges-31-in-third-quarter-2016-11-03)in the third quarter for the first time in 2016, but the longer-term trend is still a poor one that bodes ill for the U.S. economy.

Factory orders rose (http://www.marketwatch.com/story/factory-orders-see-third-straight-rise-in-september-2016-11-03) 0.3% in September. Meanwhile, ISM services index fell to 54.8% in October from 57.1%, below the 56% forecast by economist polled by MarketWatch.

--Victor Reklaitis in London contributed to this report.

(END) Dow Jones Newswires

November 03, 2016 15:13 ET (19:13 GMT)

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