Overview
On Wednesday, U.S. stock indexes closed lower, with tech and chip stocks under pressure despite strong earnings reports from Microsoft and Meta. Microsoft and Meta both reported after the bell, beating revenue expectations, while Alphabet continued to rally after its upbeat report the day before, rising 2.8%. However, weakness in semiconductor stocks weighed on the market, as AMD and Qorvo both issued downbeat forecasts, leading to significant declines in these shares.
Meanwhile, the Dow Jones Industrial Average dipped as other sectors posted mixed results, with health care and consumer stocks facing challenges. In economic data, U.S. GDP growth for Q3 came in slightly below estimates, while private payrolls grew more than expected, adding to the uncertainty surrounding the Federal Reserve’s rate policy as the Nov. 5 election approaches.
- Dow Jones Industrial Average: Fell 0.22% to 42,141.54
- S&P 500: Lost 0.33% to 5,813.67
- Nasdaq Composite: Declined 0.56% to 18,607.93
Fear & Greed Index
Neutral – Investors are weighing mixed earnings results against rising yields and key economic data, maintaining a cautious stance.
Sector Performance
- Winners:
- Communication Services: Led by Alphabet, which gained 2.8%, offsetting some losses in other tech areas.
- Consumer Staples: Modest gains as investors seek defensive positions amid volatility.
- Losers:
- Information Technology: The sector fell 1.34%, with AMD, Qorvo, and Super Micro Computer posting sharp declines following weak forecasts and accounting issues.
- Health Care: Eli Lilly dropped 6.2% after missing sales estimates for its weight-loss and diabetes medications.
Key Movers
- Alphabet (GOOGL): Rose 2.8%, maintaining upward momentum after strong earnings, benefiting the communication services sector.
- AMD (AMD): Declined 10.6% on a weak forecast, impacting chip stocks.
- Qorvo (QRVO): Plunged 27.3% following disappointing guidance, weighing on semiconductor sentiment.
- Super Micro Computer (SMCI): Fell 32.6% after Ernst & Young resigned as the company’s accountant, raising concerns over financial stability.
Economic Data
- GDP Growth: U.S. GDP grew at a 2.8% annualized rate for Q3, slightly below the 3.0% estimate, reflecting steady but slower economic momentum.
- Private Payrolls: Surged by 233,000 in October, surpassing expectations and suggesting resilience in the labor market ahead of the Federal Reserve’s next policy decision.
Outlook
With the Nov. 5 presidential election around the corner and ongoing mixed earnings reports, volatility is expected to remain high. Rising Treasury yields and the Federal Reserve’s rate policy will be closely watched for their potential impact on growth sectors, especially as the economic data reflects both strength in private hiring and slower GDP growth. Investors will continue to scrutinize the tech sector as additional earnings reports come in, balancing optimistic earnings against pressure from the chip industry.
