Market Turmoil: Major Indices Drop as Earnings Disappoint
The S&P 500 Index ($SPX) (SPY) is down -1.43%, the Dow Jones Industrials Index ($DOWI) (DIA) has fallen -0.80%, and the Nasdaq 100 Index ($IUXX) (QQQ) shows a decrease of -2.03% today.
Stocks Decline Amid Weak Earnings Reports
Today, stocks are experiencing sharp declines, with the S&P 500 reaching a three-week low, the Dow Jones Industrials dropping to a six-week low, and the Nasdaq 100 recording a one-week low. Poor earnings results from Microsoft and Meta Platforms have negatively impacted tech shares and overall market morale. Investors reacted to mixed U.S. economic news, including a surprising drop in weekly initial unemployment claims to a five-month low. Personal spending for September increased more than anticipated, and the core PCE price index remained steady at +2.7% year-over-year.
Market Support from Easing Wage Pressures
Despite the losses, stocks found some support today as wage pressures eased; the Q3 employment cost index reported its slowest growth in three years. Additionally, stronger-than-expected economic news has improved forecasts for a potential economic soft landing.
Notable Earnings Results Shift Market Dynamics
On a brighter note, Paycom Software surged over +22% after exceeding Q3 revenue expectations and raising its lower annual revenue forecast. Booking Holdings also rose more than +4% post a strong Q3 gross bookings report, while Etsy climbed over +9% following revenue that surpassed estimates.
Employment and Spending Figures Signal Economic Resilience
Weekly initial unemployment claims fell by -12,000 to a five-month low of 216,000, defying expectations of a climb to 230,000. The Q3 employment cost index grew by +0.8% quarter-over-quarter, underwhelming analysts who predicted a +0.9% increase, marking the slowest rise in three years.
Mixed Economic Indicators Raise Caution
September personal spending rose +0.5% month-over-month, exceeding the +0.4% estimate, while personal income increased by +0.3%, as expected. The core PCE price index remained stable at +2.7% year-over-year, slightly above the anticipated +2.6%. However, a significant drop in the Chicago PMI to a five-month low of 41.6 adds to market caution.
Anticipation Builds for Upcoming Earnings Reports
Investor caution lingers ahead of earnings from major companies like Amazon and Apple, expected after Thursday’s market close. Additionally, market participants are awaiting Friday’s October unemployment report and Tuesday’s U.S. elections.
Corporate Earnings Show Mixed Results
This week marks the peak of corporate Q3 earnings. So far, 76% of S&P 500 companies reporting earnings have surpassed estimates. Bloomberg Intelligence forecasts an average +4.3% year-over-year increase in quarterly earnings, a decline from the +7.9% growth consensus in July. The market currently reflects a 94% chance of a -25 basis point rate cut during the November 6-7 FOMC meeting.
International Market Trends Diverge
Overseas stock markets present a mixed picture. The Euro Stoxx 50 has declined to a one-and-a-half month low, down -1.34%, while China’s Shanghai Composite Index gained +0.42%. Japan’s Nikkei Stock 225 has fallen -0.50%.
Bond Markets Respond to Economic Data
December 10-year T-notes (ZNZ24) fell -15 ticks today, with the yield rising +1.8 basis points to 4.319%. T-note prices declined due to negative impacts from falling European government bonds and the unexpected drop in jobless claims. The rise in inflation expectations also weighed on T-notes, with breakeven inflation climbing to a four-and-three-quarter month high of 2.358%. Concerns about the U.S. budget deficit add pressure, but easing wage pressures provided some limit to losses.
Rising Yields in European Bonds
European government bond yields are climbing, with the 10-year German bund yield reaching a three-month high of 2.448%, up +3.1 basis points. The 10-year UK gilt yield rose to a ten-and-three-quarter month high of 4.531%, increasing by +14.2 basis points.
Positive Signs in the Eurozone Economy
The Eurozone unemployment rate held steady at a record low of 6.3%, outperforming expectations for an increase. October CPI rose +2.0% year-over-year, exceeding the +1.9% consensus, while core CPI showed a +2.7% annual rise, above the expected +2.6%.
Key Stock Movements in the U.S. Market
In today’s trading, Microsoft (MSFT) led the Dow losses, dropping over -5% despite reporting better-than-expected Q1 EPS. Revenue growth for Azure cloud services showed a slight decline from previous quarters, spurring investor concerns. Chip stocks are under pressure, with Nvidia (NVDA), Broadcom (AVGO), NXP Semiconductors NV (NXPI), and Micron Technology (MU) all down more than -4%.
Meta Platforms (META) fell over -2%, despite better-than-expected Q3 EPS, as it did not disclose its 2025 capital expenditure plans. eBay (EBAY) tumbled over -9% after a weak Q4 revenue forecast, while Huntington Ingalls Industries (HII) dropped over -23% following disappointing EPS of $2.56, far below the consensus of $3.85. Estee Lauder (EL) saw a decline of more than -22% after guiding Q2 EPS far below expectations and reducing its dividend.
Super Micro Computer (SMCI) plunged over -15%, following a -32% drop earlier in the week, after its auditor resigned amid a U.S. Justice Department investigation. MGM Resorts International (MGM) fell more than -11%, with adjusted EPS of 54 cents below market expectations.
Contrastingly, Paycom Software (PAYC) soared +22% after exceeding expectations in revenue and updating its annual forecast positively. International Paper (IP) and Etsy (ETSY) also enjoyed gains, with shares increasing more than +11% and +9% respectively after exceeding earnings expectations. Booking Holdings (BKNG) rose over +4% following strong gross bookings for Q3.
Market Movers: Impressive Earnings Boost Stock Prices
Strong Earnings Drive Significant Stock Gains
Stock prices are on the rise following impressive earnings reports. ConocoPhillips (COP) saw its shares increase by +7% after the company reported a Q3 adjusted EBITDA of $931 million, exceeding the consensus estimate of $876.9 million. In addition, ConocoPhillips raised its full-year adjusted EBITDA forecast to $2.43 billion, up from a previous estimate of $2.35 billion, which was also stronger than the consensus of $2.36 billion.
Carvana (CVNA) Rises on Strong Vehicle Sales
Meanwhile, Carvana (CVNA) experienced a notable surge of over +19% after announcing Q3 vehicle unit sales of 108,651. This figure surpassed expectations, as analysts anticipated sales of 106,702 vehicles.
Confluent (CFLT) Exceeds Profit Expectations
In another significant move, Confluent (CFLT) shares climbed more than +18% following the release of its Q3 adjusted EPS, which came in at 10 cents, exceeding the consensus of 5.2 cents. Additionally, the company raised its full-year adjusted EPS forecast to 25 cents, an increase from the initial range of 19 to 20 cents, which also surpassed the consensus expectation of 21 cents.
Earnings Reports Scheduled for October 31, 2024
A range of companies are set to report their earnings on October 31, 2024, including: AES Corp (AES), Alliant Energy Corp (LNT), Altria Group Inc (MO), Amazon.com Inc (AMZN), Amcor PLC (AMCR), AMETEK Inc (AME), Apple Inc (AAPL), Aptiv PLC (APTV), Ball Corp (BALL), BorgWarner Inc (BWA), Bristol-Myers Squibb Co (BMY), Camden Property Trust (CPT), Cigna Group/The (CI), CMS Energy Corp (CMS), Comcast Corp (CMCSA), ConocoPhillips (COP), Coterra Energy Inc (CTRA), Eastman Chemical Co (EMN), Eaton Corp PLC (ETN), Entergy Corp (ETR), Erie Indemnity Co (ERIE), Estee Lauder Cos Inc/The (EL), Generac Holdings Inc (GNRC), Huntington Ingalls Industries (HII), IDEXX Laboratories Inc (IDXX), Ingersoll Rand Inc (IR), Intel Corp (INTC), Intercontinental Exchange Inc (ICE), International Paper Co (IP), IQVIA Holdings Inc (IQV), Juniper Networks Inc (JNPR), Kellanova (K), Kimco Realty Corp (KIM), Linde PLC (LIN), Mastercard Inc (MA), Merck & Co Inc (MRK), Norwegian Cruise Line Holdings (NCLH), Parker-Hannifin Corp (PH), Quanta Services Inc (PWR), Regeneron Pharmaceuticals Inc (REGN), Southern Co/The (SO), Teleflex Inc (TFX), Uber Technologies Inc (UBER), VICI Properties Inc (VICI), WEC Energy Group Inc (WEC), Willis Towers Watson PLC (WTW), WW Grainger Inc (GWW), Xcel Energy Inc (XEL), and Xylem Inc/NY (XYL).
More Stock Market News from Barchart
On the date of publication,
Rich Asplund
did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy
here.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.