Wall Street Today | Big Tech's Tumble Shows the Risks of Uneven Growth
RECAP
Stocks extended losses Thursday, with tech stocks leading the Nasdaq into correction territory after "Magnificent Seven' earnings disappointed. GDP growth numbers for the third quarter came in exceptionally hot at nearly 5%, after dropping to 2% over the summer. Oil fluctuated as the market grappled with an unclear Israel-Hamas conflict.
The $Dow Jones Industrial Average(.DJI.US$, $S&P 500 Index(.SPX.US$, and $Nasdaq Composite Index(.IXIC.US$ all fell, the Nasda dropping over 2% intraday.
MACRO
S&P 500 Teeters on Brink of Correction
The rout in US stocks has brought the S&P 500 Index to a crucial inflection point. It’s teetering near a correction after breaching 4,200 for the first time since May — a key technical level that may point to a longer-term selloff. The S&P briefly breached 4,130 during intraday trading Thursday before bouncing back above.
If the selling continues and the benchmark gauge for American equities stays below that psychological threshold, there are few levels to lure dip buyers, according to technical analysts, who monitor daily averages and other metrics to determine stock-market momentum.
The US Q3 Economy is Growing At Fastest Pace in Nearly 2 Years
The U.S. economy grew even faster than expected in the third quarter. GDP rose at a 4.9% annualized pace in the July-through-September period, up from an unrevised 2.1% pace in the second quarter. Economists surveyed by Dow Jones had been looking for a 4.7% acceleration.
The sharp increase came due to contributions from consumer spending, increased inventories, exports, and government spending.
SECTORS
Tech's Tumble Shows the Risks of Overconfidant Growth
Investors cheered tech behemoths as they soared this year. Now, the biggest stocks in the $Nasdaq Composite Index(.IXIC.US$ are getting crushed the most--causing pain across the market.
This is the consequence of narrow market leadership," said Steve Sosnick, chief strategist at Interactive Brokers, in an email. "The bar gets raised ever higher, and if enough people crowd in, there are fewer incremental buyers if they want to get out."
Oil Drops as Bearish Trends Counter Middle East Conflict Price Increase
Oil dropped in wider financial markets as prices dented gains from Israel’s planned ground invasion of Gaza. West Texas Intermediate fell to around $84 a barrel, adding to a two-week string of sessions in which prices have swung in a range of more than $2.
“The turbulent price action” continues to “whipsaw algorithmic trend followers” and could spark selling by commodity trading advisers, Dan Ghali, a commodity strategist at TD Securities, told Bloomberg. Equity markets were also lower, and the dollar firmed on Thursday, making commodities priced in the currency less appealing.
COMPANIES
Amazon Beat Sales Estimates in Q3
$Amazon(AMZN.US$ posted $0.94 vs. $0.81 Estimate, Revenue $143.1B vs. $141.6B Estimate.
Ford Earnings Positive
$Ford Motor(F.US$ posted third-quarter revenue that grew 11% year-over-year to $44 billion; net income of $1.2 billion compared to a year-ago loss of $827 million; adjusted EBIT increases to $2.2 billion.
Meta Shares Dip After Conservative Q4 Guidance Despite Earnings Beat
$Meta Platforms(META.US$ announced its Q3 earnings on Wednesday, exceeding expectations in revenue and profits. Nonetheless, the initial optimism was short-lived as the company's conservative Q4 guidance hindered it.
Endeavor Group Stock Rises 25% on Buyout Proposal
$Endeavor Group(EDR.US$ shares are soaring Thursday after the company announced plans late Wednesday to look into strategic alternatives to maximize shareholder value. The PE firm Silver Lake said it's considering taking the company private and owns about 71% of Endeavor's voting power.
Mastercard Tops Estimates as International Travel Spending Rises
$MasterCard(MA.US$ reported third-quarter earnings of $3.39 a share on revenue of $6.53 billion, topping Wall Street estimates of $3.21. However, the total payment volume slowed from 14% over the summer to 11% growth in October.
Southwest Airlines Stock Slumps to a 9-year Low After Revenue Miss, as Bookings Disappoint
$MasterCard(MA.US$ reported third-quarter earnings of $3.39 a share on revenue of $6.53 billion, topping Wall Street estimates of $3.21. However, the total payment volume slowed from 14% over the summer to 11% growth in October.
Source: Bloomberg, Dow Jones, CNBC
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