U.S. stock markets experienced a decline on Thursday as investors analyzed recent earnings reports from major technology companies, coinciding with the conclusion of a meeting between President Donald Trump and Chinese President Xi Jinping.
The S&P 500 fell by 0.9%, while the Nasdaq Composite dropped 1.5%. The Dow Jones Industrial Average also decreased, losing 95 points or 0.2%.
Tech heavyweights Alphabet, Meta, and Microsoft released their quarterly earnings after the market closed on Wednesday. While Alphabet’s shares surged by approximately 3% due to stronger-than-expected results, shares of Meta and Microsoft experienced significant declines, falling 11% and 3%, respectively. Investors expressed concerns regarding the rising expenditure forecasts from both companies. This shift contributed to a broader rotation away from technology stocks during the trading session. Conversely, bank stocks such as JPMorgan and Bank of America saw gains, alongside health-care stocks, bolstered by Eli Lilly’s robust quarterly performance and upward guidance, which prompted a 4% increase in its shares.
Jed Ellerbroek, a portfolio manager at Argent Capital Management, characterized the day as a “value day,” highlighting the natural and healthy market adjustment following tech’s recent leadership. He emphasized that strong investment in AI infrastructure remains a key factor despite the day’s trading dynamics.
In addition to the stock movements, trade relations were a focal point after Trump agreed to reduce fentanyl tariffs on Chinese imports from 57% to 47%. This agreement includes China’s commitment to curtail the flow of fentanyl into the U.S. and to purchase American agricultural products, such as soybeans. Further, China announced a delay in imposing new restrictions on rare earth exports for a year, which Trump mentioned as a settled issue.
However, challenges persist in negotiations involving the export of Nvidia chips and the divestiture of TikTok. The Chinese Ministry of Commerce indicated a willingness to address TikTok-related concerns but did not provide further specifics.
Ellerbroek cautioned that trade volatility connected to Trump’s policies will continue to influence capital markets for the foreseeable future. He noted that semiconductor stocks like Nvidia, Broadcom, and AMD faced pressure, underscoring the political uncertainties surrounding semiconductor investments, as these companies navigate the complex U.S.-China relationship.
Wall Street recently experienced a mixed trading day, with the Dow slightly declining after previously reaching record highs. The S&P 500 closed flat, while the Nasdaq finished up nearly 0.6%. These movements followed remarks from Federal Reserve Chair Jerome Powell, suggesting that further interest rate cuts may not be guaranteed at the upcoming December meeting, which contrasts with investor expectations. The Fed had also recently lowered its benchmark overnight borrowing rate by a quarter percentage point.
Amidst the fluctuations, there remains a sense of resilience in the market, with an ongoing emphasis on sectors that show promise and the potential for recovery as future earnings reports are released and trade dynamics evolve.