Premarket Stocks: Facebook’s Shares Dropped, But Not Out

“What I saw time and again on Facebook was that there were conflicts of interest between what was good for the public and what was good for Facebook, and Facebook chose time and again to optimize for its own interests,” Haugen said.

Obviously, none of this is good news for the company and yet stocks rebounded 1.5% in premarket trading on Tuesday.

What gives? While public sentiment has turned strongly against Facebook in recent years, Wall Street has continued to reward its ability to make money.

Facebook doubled its profits in the second quarter to reach $10.4 billion. Advertising revenues increased by 56% compared to the same period a year earlier.

Shares are up more than 19% so far this year, and 46% since companies like Hershey’s and Denny’s paused ads on the platform as part of the #StopHateforProfit campaign in July 2020.

Big picture: A meaningful, long-lasting blow to Facebook’s stock would require a major shift in advertiser behavior, as well as some big wins from fed up regulators.

Recent developments could increase the pressure. Democratic Rep. Alexandria Ocasio-Cortez said Monday’s outage across all platforms would not have happened “if Facebook’s monopolistic behavior had been checked back when it should have been.”

“Break them up,” she tweeted.

But don’t expect Wall Street to dump large tranches of Facebook stock for the time being. At least not until it releases its third quarter results.

OPEC decision sends US oil prices to 7-year high

The latest: OPEC and its allies, including Russia, said after an unusually swift meeting Monday they would stick to an earlier decision to increase supplies by 400,000 barrels per day in November.

That pushed Brent crude futures, the global oil benchmark, up 2.5%. They continued to rise Tuesday, reaching their highest level since 2018. West Texas Intermediate futures, the US benchmark, have hit their highest level in seven years.

“It’s not that [OPEC and allies do] not recognize the coming supply shortage,” said Bjornar Tonhaugen, head of oil markets at Rystad Energy. “The group is well aware of global inventory decline, maintenance work and rising demand, but chose to wait until later this year to stronger supply approach.”

What it means: Higher prices are a positive development for crude oil producers. But for consumers, who were already concerned about inflation, it is a growing concern.

Energy prices in developed countries rose 18% in August, the fastest pace since 2008, according to data released Tuesday by the Organization for Economic Co-operation and Development.

Watch this space: Oil prices could rise even higher thanks to the rising costs of natural gas and coal, which could lead to a race for crude oil to generate power in the winter, UBS analyst Giovanni Staunovo said in a note to customers.

A cold winter in the Northern Hemisphere or disruptions to fresh supplies could also keep prices from falling, he added.

Another Chinese real estate developer is in trouble

Global investors are increasingly concerned that the Chinese real estate market is a bubble about to burst.

In recent weeks, much has been obsessed with the fate of Evergrande, the heavily indebted Chinese real estate developer looking to earn the money he needs to survive.

Step back: The news has revived fears that debt is mounting in China’s overstretched real estate sector, reports my CNN Business colleague Laura He. The industry is vital to the Chinese economy and accounts for about 30% of production.

“The [Chinese] The real estate sector is a cause for concern,” Macquarie Group economists Larry Hu and Xinyu Ji wrote in a research paper on Tuesday. Macquarie estimates that real estate sales in the top 30 Chinese cities fell by 31% in September.

Fallout will depend on what Beijing will do next. The government is expected to step in to mitigate the impact on homebuyers, but may be tougher on the businesses themselves if it tries to convey a message of financial discipline.

Next one

The ISM Non-Manufacturing Index, which tracks the US services sector, arrives at 10 a.m. ET.

Also today: The Facebook whistleblower’s testimony before the Senate Subcommittee on Consumer Protection, Product Safety and Data Security also begins at 10 a.m. ET.