On Thursday, high expectations took a toll on Wall Street, as U.S. stock indexes fell despite strong profits from companies like Microsoft and Meta Platforms. The S&P 500 dropped 1.9%, the Dow Jones Industrial Average fell 0.9%, and the Nasdaq composite tumbled 2.8%. Microsoft and Meta Platforms reported better-than-expected profits, but their stocks still declined as investors focused on potential disappointments in their growth forecasts, particularly for Microsoft’s Azure cloud-computing business.
Tech stocks, including Microsoft and Meta Platforms, have been leading the market but faced criticism for their rapidly climbing stock prices. Thursday’s decline was also influenced by Amazon and Apple, which fell before releasing their profit reports. Companies like Tesla and Alphabet had previously reported strong results, boosting their stock prices, but Nvidia’s upcoming report is highly anticipated after its stock soared over 880% in the last two years. The drop in Big Tech stocks erased the S&P 500’s gains for the month, marking its first down month in the last six.
Despite the overall decline in tech stocks, Norwegian Cruise Line Holdings and Altria Group saw gains after reporting strong profits. The cruise ship operator cited strong demand across its brands and raised its profit forecast, while Altria Group credited its Marlboro brand and announced a cost-cutting initiative. Oil-and-gas companies also rose as the price of U.S. crude recovered slightly. The overall market saw the S&P 500 fall 108.22 points, the Dow drop 378.08 points, and the Nasdaq composite tumble 512.78 points.
In the bond market, Treasury yields edged lower following mixed economic reports. The inflation rate slowed to 2.1% in September, close to the Federal Reserve’s target of 2%. Another report showed a slowdown in workers’ wages and benefits growth, potentially reducing inflation pressure. Fewer workers also applied for unemployment benefits, indicating relatively low layoffs. Treasury yields fluctuated before ultimately falling, with the 10-year Treasury yield dropping to 4.27%.
Stock markets around the world also experienced declines, with indexes falling in Europe and Asia. South Korea’s Kospi dropped 1.5% after North Korea test-launched a new intercontinental ballistic missile. Overall, high expectations and concerns about tech stock valuations contributed to the market’s decline, leading to a mixed day for investors. Traders are closely watching upcoming earnings reports and economic data to gauge the market’s future direction.
