Markets fall when earnings come in; Investors evaluate economic data

  • MetaPlatforms predicts that it will cost more than the estimate for 2024
  • UPS cuts full-year earnings outlook
  • Western Digital collapsed after the Gioxia merger was removed
  • Amazon.com rises in extended trading after results
  • Indexes down: Dow 0.76%, S&P 1.18%, Nasdaq 1.76%

NEW YORK, Oct 26 (Reuters) – U.S. stocks fell on Thursday, with tech and tech-leaning megacap stocks down as investors digested mixed quarterly earnings and signs of an economic slowdown that could encourage the Federal Reserve to keep interest rates on hold longer. than expected.

All three major U.S. stock indexes ended in the red, and all are on track for weekly declines.

A “magnificent seven” weighed down megacap stocks amid clouded earnings guidance and a “long-term high” interest rate scenario.

The NYSE FANG+ index of momentum stocks (.NYFANG) fell 2.7%.

“Today is about the ‘magnificent seven,’ and I don’t think everybody can be satisfied with anything they can post in earnings,” said Scott Lautner, chief investment officer at Horizon Investments in Charlotte, North Carolina. “So we’re seeing investors taking profits and getting a spin off of everything that’s been worked for this year.”

The third-quarter reporting season has shifted into overdrive and nears its halfway point, with more than a third of the companies in the S&P 500 set to release results this week.

At last glance, four out of five companies beat earnings estimates. Analysts’ most recent estimates, according to LSEG, call for year-over-year S&P 500 earnings growth of 2.6%.

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Part of the strong data included a 4.9% quarterly annualized advance in third-quarter gross domestic product, the strongest reading in nearly two years, feeding investor concerns about tight central bank policy.

“Investors are digesting economic data through the lens of an “aggressive Federal Reserve … that challenges the idea that the Fed will start cutting rates in 2024,” said Greg Bassuk, CEO of AXS Investments in New York.

“Ironically, while the numbers are strong, they heighten investor concerns about the Fed’s long-term overhang on interest rates,” Bassuk added.

The Dow Jones Industrial Average (.DJI) fell 251.63 points, or 0.76%, to 32,784.3, the S&P 500 (.SPX) lost 49.54 points, or 1.18%, to 4,137.23 and the Nasdaq Composite fell 25.5%. 1.76%, 12,595.61.

Among the 11 major sectors in the S&P 500, communications services (.SPLRCL) saw the biggest percentage loss, falling 2.6%, while real estate (.SPLRCR) rose 2.2% on the session.

Meta Platforms ( META.O ) beat third-quarter revenue and profit expectations, but forecast 2024 spending to exceed analyst forecasts and suggested the Israel conflict could dampen fourth-quarter sales. Its shares fell 3.7%.

United Parcel Service ( UPS.N ) cut its earnings forecast for 2023, sending its shares down 5.9%.

Chipmaker Western Digital Corp, a 9.3% merger talks with Japan’s Kyoxia Holdings, has stalled.

IBM ( IBM.N ) rose 4.9% following its consensus quarterly report, buoyed by solid demand for its software solutions.

Amazon.com ( AMZN.O ) shares rose in extended trading after the e-commerce giant reported better-than-expected quarterly earnings.

Declining issues outnumber advancing issues by a 1.02-to-1 ratio on the NYSE; On the Nasdaq, a 1.14-to-1 ratio favored decliners.

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S&P 500 not posting new 52-week highs and 35 new lows; The Nasdaq Composite posted 13 new highs and 429 new lows.

Volume in US equities was 11.63 billion shares, compared to the full session’s average of 10.72 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Angika Biswas and Shashwat Chauhan in Bangalore; Editing by David Gregorio

Our Standards: Thomson Reuters Trust Principles.

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