A wave of risk aversion swept across global markets on Thursday, triggered by investor disappointment over third-quarter tech earnings. This sentiment led to the steepest drop in major U.S. indices in nearly two months, marking a dramatic shift in market sentiment.
Microsoft, a tech behemoth, plummeted over 5% in midday trading in New York, on track for its worst trading session in two years. While the company exceeded earnings estimates, its forecast for slower growth in its Azure cloud business dampened investor enthusiasm, raising concerns about future revenue prospects.
Meta Platforms, the social media giant, also experienced a significant decline, falling over 4% despite a strong quarterly performance. The reason for this drop? Meta projected “significant” capital expenditure growth for the coming year, primarily allocated to building out its AI infrastructure. This expenditure plan, while signaling significant investment in future growth, sparked worries among investors.
The collective impact of these tech giants’ performances was felt throughout the market, with the elite ‘Magnificent Seven’ tech group shedding nearly $500 billion in market capitalization within a single day. This drop came after the group had recently reached a record high of $16.8 trillion. As the day progressed, the focus shifted to Apple and Amazon, both set to report earnings after the market close.
Meanwhile, inflation data released on Thursday provided mixed signals for the economy. The Personal Consumption Expenditures (PCE) price index, a key inflation gauge, slowed as anticipated to 2.1% annually. However, the Fed’s preferred inflation measure, the core PCE price index, remained at 2.7% year over year, slightly exceeding the expected 2.6%. This divergence highlights the persistent inflationary pressures within the economy.
In response to the tech-driven selloff and inflationary concerns, the S&P 500 dropped 1.4%, the tech-heavy Nasdaq 100 slid 2.2%, both marking their worst sessions since September 6th. The CBOE Volatility Index (VIX), a gauge of market fear, surged 12%.
Risk aversion also spilled over into commodities markets, with gold prices plummeting 1.7%, marking their worst day since July, and silver plunging 3% after a 2% decline on Wednesday. The cryptocurrency market mirrored this negative sentiment, with Bitcoin falling 2.4%, and crypto-related stocks experiencing significant losses. Coinbase Global, a leading cryptocurrency exchange, tumbled over 10% on disappointing earnings, eyeing its worst day since May.
Thursday’s Performance in Major U.S. Indices and ETFs:
| Index/ETF | Price | 1-day %chg |
|—|—|—|
| Dow Jones | 41,832.30 | -0.7% |
| Russell 2000 | 2,213.10 | -0.9% |
| S&P 500 | 5,729.43 | -1.4% |
| Nasdaq 100 | 19,943.07 | -2.2% |
| SPDR S&P 500 ETF Trust (SPY) | $571.51 | -1.5% |
| SPDR Dow Jones Industrial Average (DIA) | $418.60 | -0.8% |
| Invesco QQQ Trust Series (QQQ) | $485.78 | -2.2% |
| iShares Russell 2000 ETF (IWM) | $219.65 | -0.7% |
| Utilities Select Sector SPDR Fund (XLU) | | +1.4% |
| Technology Select Sector SPDR Fund (XLK) | | -2.4% |
Thursday’s Stock Movers:
Stocks reacting to corporate earnings included:
*
Booking Holdings Inc. (BKNG):
Up over 5%*
Amgen Inc. (AMGN):
Up 1.7%*
Starbucks Corp. (SBUX):
Down 0.6%*
eBay Inc. (EBAY):
Down over 8%*
MicroStrategy Inc. (MSTR):
Up 1.9%*
Carvana Co. (CVNA):
Up 24%*
Mastercard Inc. (MA):
Down 1.8%*
Merck & Company Inc. (MRK):
Down 2.8%*
Linde plc (LIN):
Down 2.9%*
Comcast Corp. (CMCSA):
Up 2.9%*
Uber Technologies Inc. (UBER):
Down over 11%*
Eaton Corp. plc (ETN):
Down 5%*
ConocoPhillips (COP):
Up 6%*
Bristo-Myers Squibb Co. (BMY):
Up 3.3%*
Southern Company (SO):
Up 2.2%*
Altria Group Inc. (MO):
Up 7.6%*
Regeneron Pharmaceuticals Inc. (REGN):
Down 9%*
The Cigna Group (CI):
Up 3%*
Norwegian Cruise Line Holdings Ltd. (NCLH):
Up over 9%*
Cheniere Energy Inc. (LNG):
Up over 5%Large-cap companies scheduled to report their earnings after the close included Apple Inc., Amazon.com Inc., Intel Corp., Atlassian Corp., and Coterra Energy Inc.
