Market Volatility: Tech Earnings Disappoint, Inflation Cools
Tech Giants Struggle to Impress
The market took a hit on Thursday, with major indexes falling for the second consecutive day. Despite beating earnings estimates, tech giants Microsoft and Meta saw their shares slide due to disappointing forward guidance. Microsoft’s cloud business growth expectations slowed, causing a 4% decline in its stock, while Meta’s forecast of significant capital expenditures growth next year led to a 2% drop.
Earnings Season Heats Up
The week is packed with tech earnings, and investors are eagerly awaiting reports from Apple and Amazon after market close. All eyes will be on Apple’s iPhone demand, particularly after the rollout of its iOS 18.1 update, and Amazon’s expected strong beat. Alphabet’s earnings beat earlier in the week generated enthusiasm among investors, with CEO Sundar Pichai attributing the success to AI investments.
Inflation Update: Progress Toward Fed’s Target
The personal-consumption expenditures index, the Fed’s preferred inflation gauge, cooled to 2.1% year over year in September, marking progress toward the 2% inflation target. However, the core index, which excludes food and energy prices, came in hotter than expected at 2.7%. Jobless claims fell by more than expected to 216,000, a 12,000 drop from the previous week.
Market Snapshot
Here’s where US indexes stood shortly after the 9:30 a.m. opening bell on Thursday:
- S&P 500: 5,764.93, down 0.84%
- Dow Jones Industrial Average: 41,943.67, down 0.47% (-198.87 points)
- Nasdaq composite: 18,372.58, down 1.25%
Other Market News
- Arizona is at the center of the debate about the economic impact of mass deportations under Trump.
- Bringing manufacturing back to the US could be a $10 trillion opportunity for the economy, according to Morgan Stanley.
- Stocks are experiencing “near-euphoric sentiment,” and the election may offer a chance to pull back, says Citi.
- Nvidia stock is undervalued due to the need for AI companies to spend another $9 trillion to achieve superintelligence, according to Softbank CEO.
Commodities, Bonds, and Crypto
- Oil futures rose, with West Texas Intermediate crude up almost 1% to $69.27 a barrel.
- Gold slipped almost 1% to $2,776.80 an ounce.
- The 10-year Treasury yield rose two basis points to 4.292%.
- Bitcoin edged up to $71,869.
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