U.S. Stocks Move Sharply Lower Amid Negative Reaction To Microsoft, Meta Results

Stocks have moved sharply lower over the course of the trading day on Thursday, extending the downward move seen late in the previous session. The major averages have all moved to the downside, with the tech-heavy Nasdaq showing a particularly steep drop.

Currently, the major averages are just off their lows of the session. The Nasdaq is down 374.39 points or 2.0 percent at 18,233.54, the S&P 500 is down 73.58 points or 1.3 percent at 5,740.09 and the Dow is down 263.72 points or 0.6 percent at 41,877.82.

The sell-off on Wall Street comes amid a negative reaction to earnings news from tech giants Microsoft (MSFT) and Meta Platforms (META).

Shares of Microsoft are plunging by 5.9 percent after the company reported better than expected fiscal first quarter results but provided disappointing revenue guidance for the current quarter.

Facebook parent Meta is also tumbling by 2.7 percent after reporting third quarter earnings that beat estimates but weaker than expected user growth. Meta also forecast an increase in capital spending due to AI investments.

Traders are also reacting to closely watched consumer price inflation data that largely came in line with economist estimates.

The Commerce Department said its personal consumption expenditures (PCE) price index rose by 0.2 percent in September and the annual rate of growth slowed to 2.1 percent, which both matched expectations.

However, the annual rate of growth by the core PCE price index, which excludes food and energy prices, was unchanged from the previous month at 2.7 percent. Economists had expected the pace of growth to slow to 2.6 percent.

The slightly faster than expected core price growth may have added to recent concerns the Federal Reserve will lower interest rates more slowly than hoped.

“The year-over-year core PCE print indicated a 2.7% increase suggesting that the Fed is still on a bumpy course in this last mile to quell inflation and declare victory,” said Quincy Krosby, Chief Global Strategist for LPL Financial.

She added, “Although a 25-basis point move lower at the next Fed meeting is expected the Fed will need to acknowledge that with still resilient consumer spending, higher wages from a series of successful strikes, and a solid labor market, they will need to adopt the “gradual” approach towards lowering rates until there’s a comfort level within the FOMC that inflation isn’t poised to continue edging higher.”

A report from the Labor Department showing initial jobless claims unexpectedly fell to a five-month low last week may also have added to the worries about slower rate cuts.

Sector News

With Microsoft helping lead the way lower, software stocks are seeing substantial weakness on the day, dragging the Dow Jones U.S. Software Index down by 3.9 percent.

Significant weakness is also visible among semiconductor stocks, as reflected by the 3.7 percent nosedive by the Philadelphia Semiconductor Index. The index has tumbled to its lowest intraday level in over a month.

Gold stocks have also moved sharply lower along with the price of the precious metal, resulting in a 3.0 percent slump by the NYSE Arca Gold Bugs Index.

Computer hardware, networking and retail stocks are also seeing considerable weakness, while utilities and energy stocks are bucking the downtrend.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly lower on Thursday. Japan’s Nikkei 225 Index slid by 0.5 percent and Hong Kong’s Hang Seng Index eased by 0.3 percent, although China’s Shanghai Composite Index bucked the downtrend and rose by 0.4 percent.

The major European markets have also moved to the downside on the day. While the French CAC 40 Index is down by 0.9 percent, the U.K.’s FTSE 100 Index is down by 0.7 percent and the German DAX Index is down by 0.5 percent.

In the bond market, treasuries have pulled back after moving slightly higher over the two previous sessions. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, is up by 4.7 basis points at 4.311 percent.