Financial Markets Wall Street – NEW YORK (AP) — High expectations had a negative impact on Wall Street on Thursday, causing a significant drop in U.S. stock indexes, with Microsoft and Meta Platforms being the main contributors.
Despite reporting strong profits for the summer, Microsoft and Meta Platforms dragged the stock market lower. The S&P 500 fell by 1.9%, marking its worst performance in eight weeks, and moved further away from the record high set earlier this month. The Dow Jones Industrial Average lost 378 points, equating to a 0.9% drop, while the Nasdaq composite plummeted 2.8% for the second consecutive day after reaching its latest all-time high.
Microsoft announced a larger profit growth for the latest quarter than what analysts had anticipated, and its revenue also exceeded forecasts. However, its stock price plummeted by 6% as investors and analysts searched for potential disappointments. The main concern was Microsoft’s forecast for future growth in its Azure cloud-computing business, which did not meet some analysts’ expectations.
The stock market today saw a sharp decline, with major tech companies like Microsoft and Meta Platforms contributing significantly to the drop. Microsoft reported earnings that exceeded expectations, but this was not enough to bolster its stock price. Investors are more concerned about the company’s future spending, which is expected to increase as it continues to invest in artificial intelligence. Similarly, Meta Platforms, the parent company of Facebook, reported better-than-expected profits but also warned of a ‘significant acceleration’ in spending for the next year as it ramps up its AI development efforts. This led to a 4.1% drop in its stock price.
Both Microsoft and Meta Platforms have experienced substantial growth in recent years due to the surge in AI technology, and they hold significant influence over Wall Street’s stock market. However, critics argue that their stock prices have risen too quickly, making them overpriced. Meeting high expectations becomes challenging when stock prices are soaring, and both Microsoft and Meta were among the heaviest weights on the S&P 500 on Thursday.
Additionally, other tech giants like Amazon and Apple contributed to the market’s downward trend, with Amazon’s stock price falling by 3%.
NEW YORK (AP) – On Thursday, the downside of high expectations hit Wall Street hard. Microsoft and Meta Platforms pulled U.S. stock indexes lower despite strong summer profits. The S&P 500 fell 1.9%, marking its worst day in eight weeks and moving further from its record set earlier this month. The Dow Jones Industrial Average dropped 378 points, or 0.9%. The Nasdaq composite tumbled 2.8% for a second consecutive loss after reaching its latest all-time high. Microsoft reported greater profit growth for the latest quarter than analysts anticipated. Its revenue also exceeded forecasts. However, its stock sank 6% as investors and analysts searched for possible disappointments. Many focused on Microsoft’s estimate for upcoming growth in its Azure cloud-computing business, which fell short of some analysts’ expectations.
The stock market experienced a sharp decline today, with tech giants Microsoft and Meta Platforms being significant contributors to Wall Street’s lower performance. Microsoft reported earnings that exceeded expectations, yet this was insufficient to bolster its stock prices. Investors were more concerned with the company’s future, as Microsoft’s stock was one of the heaviest weights on the S&P 500 index on Thursday.
Meta Platforms, the parent company of Facebook, also delivered a better-than-expected profit report. However, similar to Microsoft, this did not translate into a stock price increase. Instead, investors focused on Meta’s warning of a ‘significant acceleration’ in spending for the upcoming year, as the company continues to invest heavily in artificial intelligence development. This led to a 4.1% drop in Meta’s stock. Both Microsoft and Meta Platforms have seen their stocks soar in recent years due to the frenzy surrounding AI. They are now among the most influential stocks on Wall Street. Critics argue that their stock prices have climbed too quickly, making them overpriced. High expectations are hard to meet, and both companies were major factors in Thursday’s S&P 500 decline. Additionally, other tech giants like Amazon and Apple also contributed to the market’s downward trend, with Amazon’s stock price falling by 3%.The latest companies in the highly influential ‘Magnificent Seven’ group of stocks, Microsoft and Meta, along with others, knocked Wall Street sharply lower. Microsoft dropped 4% and Apple dropped 2% before releasing their profit reports after trading ended for the day. Earlier this month, Tesla and Alphabet kicked off the Magnificent Seven’s reports with results that impressed investors and led to higher stock prices. Nvidia, the lone remaining member, will report its results later this earnings season. After its stock soared over 880% in the last two years, expectations for the chip company are just as high. The tumble for Big Tech on the last day of October wiped out the S&P 500’s gain for the month. The index fell 1% for its first down month in the last six, even though it set an all-time high during the middle of it.
The stock market experienced a significant downturn today, with technology giants Microsoft and Meta contributing to the burden of high expectations that led to a sharp decline on Wall Street. According to Jonathan Krinsky at BTIG, such a substantial move was possibly overdue, following an unusually long period of calm in the market. He highlighted that the S&P 500 had not seen a 1% daily movement in either direction for the longest stretch in nearly three years, without considering rounding.
However, Thursday was not entirely negative. The cruise ship industry and tobacco sector provided some positive notes. Norwegian Cruise Line Holding saw its stock rise by 6.3% after reporting stronger profits for the latest quarter than analysts had anticipated. The company reported robust demand from customers across its brands and itineraries and raised its profit forecast for the full year of 2024.
Altria Group also performed well, with its stock increasing by 7.8%, marking one of the S&P 500’s larger gains. The company exceeded analysts’ profit expectations, with Chief Executive Billy Gifford attributing the success to the resilience of its Marlboro brand and announcing a cost-cutting initiative.
Oil-and-gas companies also rose after the price of a barrel of U.S. crude gained 0.9% to recoup some of its losses for the week and for the year so far. ConocoPhillips jumped 6.4%.
All told, the S&P 500 fell 108.22 points to 5,705.45. The Dow dropped 378.08 to 41,736.46, and the Nasdaq composite tumbled 512.78 to 18,095.15. In the bond market, Treasury yields edged lower following a mixed set of reports on the U.S. economy. One report said a measure of inflation that the Federal Reserve likes to use slowed to 2.1% in September from 2.3%. That’s almost all the way back to the Fed’s 2% target, though underlying trends after ignoring food and energy costs were a touch hotter than economists expected. A separate report said growth in workers’ wages and benefits slowed during the summer. That could put less pressure on upcoming inflation.Wall Street experienced a sharp decline today, influenced by the performance of tech giants Microsoft and Meta, as well as the burden of high expectations. Meanwhile, a third report indicated that fewer U.S. workers applied for unemployment benefits last week, suggesting a relatively low number of layoffs across the country.
Treasury yields fluctuated following the release of the reports, eventually moving lower. The yield on the 10-year Treasury note fell to 4.27% from 4.30% late Wednesday. This is still a significant increase from the 3.60% level it was at in the middle of last month.
Yields have been on the rise after a series of stronger-than-expected economic reports from the U.S. These reports have bolstered hopes that the economy can avoid a recession. This optimism is particularly relevant now that the Federal Reserve is cutting interest rates to support the job market rather than keeping them high to combat inflation. However, the unexpected resilience of the economy is also causing traders to adjust their expectations regarding how deeply the Fed will ultimately cut rates.
In foreign stock markets, indexes declined across much of Europe and Asia. South Korea’s Kospi dropped 1.5%, one of the larger losses. This followed North Korea’s test launch of a new intercontinental ballistic missile designed to be able to hit the U.S. mainland. The move was likely meant to grab America’s attention ahead of Election Day.
