Stocks opened lower on Thursday, continuing a downward trend primarily driven by disappointing earnings reports from several key “Magnificent 7” technology companies. This downturn affected major stock indexes, which closed in the red.
Early in the trading session, economic data reflecting stabilized inflation and robust employment figures contributed to a rise in interest rates. However, the likelihood of a rate cut remains stable as investors await the October nonfarm payrolls report scheduled for release soon.
According to the Bureau of Economic Analysis, the Personal Consumption and Expenditures Price Index (PCE) rose by 0.2% in September, slightly up from the previous month but in line with expectations. Core PCE, which excludes volatile food and energy prices, saw a 0.3% increase. Notably, the year-over-year increase in headline PCE now sits at 2.1%, marking the lowest level since February 2021.
The yield on the 10-year Treasury note experienced an intraday increase but ultimately settled close to its previous level, reflecting market adjustments to the recent data. The futures market indicates a strong probability that the Federal Reserve could reduce its benchmark interest rate at the upcoming FOMC meeting.
In employment news, initial jobless claims decreased to 216,000 for the week ending October 26, reflecting a decline from the previous week’s figures, suggesting continued strength in the labor market.
The Bureau of Labor Statistics will release the employment situation summary for October, with forecasts predicting nonfarm payroll growth of 120,000 and an unchanged unemployment rate of 4.1%.
The S&P 500 fell by 1.9%, while the Dow Jones Industrial Average and the Nasdaq Composite lost 0.9% and 2.8%, respectively, as investor sentiment was impacted by the performance of the Magnificent 7 stocks. Companies like Meta and Microsoft reported mixed earnings results, causing their stock values to drop despite meeting overall financial expectations.
In contrast, Carvana’s stock rose significantly after a strong earnings report, highlighting its growth as the most profitable and rapidly expanding automotive retailer. On the other hand, Uber saw a decline despite beating earnings expectations, driven by guidance that did not meet market hopes.
Overall, while the market experienced declines, some companies continue to show resilience, suggesting potential for recovery as earnings seasons continue. The adaptability and performance of firms like Carvana can provide a glimmer of hope amid broader market challenges.
As investors and analysts anticipate upcoming reports, these fluctuations in the market underscore the complex dynamics of economic recovery and corporate performance.