Stock markets opened lower and continued to decline throughout Thursday, primarily influenced by disappointing earnings from several high-profile tech companies commonly referred to as the “Magnificent 7.” The major indexes fell as investors reacted to unmet expectations from these key players, even as inflation data suggested stabilization and employment figures remained robust, leading to a slight uptick in interest rates.
The Bureau of Economic Analysis reported a 0.2% increase in the Personal Consumption and Expenditures Price Index (PCE) for September, up from 0.1% in August and aligning with forecasts. Core PCE, which excludes volatile food and energy prices, rose by 0.3%, maintaining the Federal Reserve’s preferred inflation metric. Year-over-year, the headline PCE increased by 2.1%, the lowest rate since February 2021, down from 2.3% in August, while core PCE remained steady at 2.7%.
Interest rates saw an upward adjustment, with the yield on the 10-year Treasury note rising intraday before settling at 4.28%. The futures market indicates over a 90% chance that the Federal Reserve will cut its benchmark interest rate by a quarter-point at the upcoming Federal Open Market Committee meeting.
Initial jobless claims reported by the Department of Labor registered at 216,000, reflecting a decrease, which could ease some concerns about the labor market’s stability. Economists predict an unchanged unemployment rate of 4.1% when the Bureau of Labor Statistics releases its employment report for October.
In the stock market, the S&P 500 dipped 1.9%, closing at 5,705, the Dow Jones Industrial Average fell 0.9% to 41,763, while the Nasdaq Composite dropped 2.8% to 18,095. Despite the challenges faced by the Magnificent 7, their significant market capitalization means their performance heavily influences overall index movements.
Companies like Meta Platforms and Microsoft reported mixed earnings results, with Meta’s stock declining 4.1% despite exceeding earnings expectations but falling short on user growth. Microsoft dropped by 6.1% after issuing guidance that did not meet investor expectations, particularly regarding Azure revenue growth.
On a brighter note, Carvana’s stock surged 19.3% after reporting strong earnings and a positive outlook for the fourth quarter, indicating robust demand and operational performance in the used car market. Conversely, Uber’s stock fell 9.3% despite beating earnings expectations, as it also failed to meet gross booking targets for the quarter.
Amid market fluctuations, it is crucial for investors to remain informed and attentive to economic indicators and company performance that could shape future market trends. The focus now shifts to upcoming earnings reports from Amazon and Apple, and Nvidia’s report, expected later in November, which could provide further insights into the tech sector’s performance.
In summary, while the current market landscape presents challenges, there are opportunities for growth, as illustrated by companies like Carvana, showing resilience and adaptability in the face of economic pressures.