U.S. stocks closed firmly lower Thursday trading, dragged down by losses for megacap tech stocks and underlying inflation pressures in jobs and economic data, as investors worked through another round of earnings from the so-called Magnificent 7 while bracing for tomorrow's October payroll report and next week's presidential elections and Fed policy meeting.
"Tomorrow’s labor report is the last important economic indicator before the Federal Reserve meets again," said Joe Davis, Vanguard's chief global economist. "Despite disruptions from Hurricane Helene and the Boeing strike, we expect the labor market remains on strong footing."
"With this in mind, we expect the Federal Reserve to opt for a smaller 25 basis point rate cut in November," he added.
The S&P 500 ended 107 points lower, or 1.86% to erase all of its gains for the month and trim its 2024 advance to around 20%, while the Dow ended 378 points lower.
The Nasdaq slumped 513 points, or 2.76%, for its worst session decline in nearly two months, with Microsoft falling 6.05% and Meta Platforms sliding 4.1%.
S&P 500 Closing Bell Heatmap (Oct. 31, 2024)$SPY -1.86%🟥$QQQ -2.76%🟥$DJI -0.90%🟥$IWM -1.63%🟥 https://t.co/nvREA1peHe pic.twitter.com/KYM1CIcCnL
— Wall St Engine (@wallstengine) October 31, 2024
Updated at 11:59 AM EDT
Vol spike
The S&P 500 has given back all of its gains for the month in the opening hours of trading, falling more than 91 points, or 1.56%, amid a combination of weaker megacap tech stocks and a broader slate of economic data that suggests renewed inflation pressures heading into the final weeks of the year.
Benchmark 10-year note yields are now up more than 70 basis points since the Fed's September rate cut, and were last marked at 4.304%, while 2-year notes were pegged at 4.185%.
The market's key volatility gauge, the CBOE Group's VIX index, is also on the march heading into tomorrow's October payroll report and Tuesday's Presidential election, rising 13.5% to $23.1. That level that suggests traders are expecting daily swings of around 82 points, or 1.44% for the S&P 500 over the next months
Despite the big pullback today (worst S&P move on Halloween since 2011, and first 1% day in either direction this month), the trend remains positive, and earnings beats overall have not disappointed," said Louis Navellier of Navellier Calculated Investing.
"We'll have to get past tonight's big earnings and next week's election to reestablish an undistracted view of the overall strength of market conditions," he added.
$VIX looking SPOOKY for Halloween. 🎃 https://t.co/WU0pCCaNu1 pic.twitter.com/gb8PkSiGfV
— Justin Spittler (@JSpitTrades) October 31, 2024
Updated at 10:36 AM EDT
Micro-softening
Microsoft shares tumbled nearly 6% in early trading after the tech giant issued a muted cloud computing growth forecast that offset a stronger-than-expected first quarter earnings report.
Microsoft, which is betting billions on new AI technologies, forecast current-quarter revenues in the region of $68 billion, with a 31% growth rate for its flagship Azure cloud unit.
Microsoft shares were marked 5.9% lower in early Thursday trading to change hands at $407.03 each, trimming their 2024 gain to around 9.75%.
Related: Analysts revisit Microsoft stock price targets after Q1 earnings
Updated at 9:35 AM EDT
Red open
The S&P 500 was marked 53 points, or 0.91% lower in the opening minutes of trading, with the Nasdaq falling 264 points, or 1.42%.
The Dow, meanwhile, slumped 235 points while the mid-cap Russell 2000 fell 4 points, or 0.16%.
Benchmark 2-year note yields were up one basis point 4.187% following the faster-than-expected inflation data and softer jobless claims, while 10-year paper rose 2 basis points to 4.304%.
"The market overall has been disappointed with mega tech guidance, especially with regard to Meta's AI expenditures as well as slower than anticipated integration of AI into Microsoft's cloud platform," said LPL Financial's chief global strategist Quincy Krosby.
"Moreover, there's a nearly palpable narrative taking hold that the election - rather than offering the market a sense of certainty- will do just the opposite causing volatility to spike significantly higher," she added.
S&P 500 Opening Bell Heatmap (Oct. 31, 2024)$SPY -0.89%🟥$QQQ -1.24%🟥$DJI -0.56%🟥$IWM -0.2%🟥 pic.twitter.com/aSx6kSGQVh
— Wall St Engine (@wallstengine) October 31, 2024
Updated at 9:10 AM EDT
Cutting the cable?
Comcast (CMCSA) shares surged in early trading after the media group said it's in the early stages of a move that would see it spin-off its cable network assets into a stand-alone company.
Comcast said the plan, which is in a very nascent stage, would see assets such as CNBC, the Golf Channel, MSNBC and Bravo spun into what it described a "well capitalized company" that could pursue acquisition opportunities.
Comcast, which posted stronger-than-expected third quarter revenues helped in part by Olympic ad spending, was marked 6.9% at $45.20 each.
Updated at 8:44 AM EDT
Quicker pressures
The Federal Reserve's preferred measure of inflation edged higher in September, data indicated Thursday, providing further evidence that a solid job market and an outperforming could be adding to renewed price pressures into the final months of the year.
The Bureau of Economic Analysis' PCE Price Index report showed that core prices rose at an annual rate of 2.7% last month, matching August's reading and coming in just ahead of Wall Street's 2.6% forecast.
Core pressures, which strip away volatile food and energy prices, were up 0.3% on the month, compared to August's 0.2% gain and Wall Street's consensus estimate of 0.3%.
Stocks slipped modestly lower following the release, although Treasury yields were little changed despite the firmer inflation figures.
The Labor Department, meanwhile, reported that jobless claims fell by 12,000 last week to 216,000, providing yet more evidence that the labor market has remained resilient well into the autumn months.
Core PCE YoY also a big round up: +2.65%https://t.co/fBm66N6plG pic.twitter.com/9yDs4WIQWz
— Mike Zaccardi, CFA, CMT 🍖 (@MikeZaccardi) October 31, 2024
Updated at 8:17 AM EDT
Boss rider
Peloton Interactive (PTON) shares powered higher in early trading after the connected fitness group posted some solid third quarter cash flow and named former Apple executive Peter Stern as group CEO.
Stern, who has also worked with Ford and TimeWarner, will start on January 1, with chairwoman Karen Boone serving as interim boss over the final months of the year.
Peloton shares were marked 11% higher in premarket trading to indicate an opening bell price of $7.38 each , move that would extend the stock's six-month surge to around 138%.
"We are also raising our FY25 Free Cash Flow target to $125M+, up $50M from our previous guidance, primarily from lower inventory production that we expect to create a greater working capital tailwind, as well as continued operating expense efficiencies," added $PTON.
— NOTRELOAD AI (@thudderwicks) October 31, 2024
“We’re…
Updated at 7:21 AM EDT
Uber skids
Uber Technologies (UBER) shares slumped lower in premarket trading after the ride-sharing group posted solid third quarter earnings but muted ride booking growth into the final months of the year.
Uber topped Wall Street's revenue forecast with an $11.89 billion tally, as gross booking rose 16.1% to $40.97 billion. But the group said that total would rise to between $42.75 billion and $44.25 billion in the current quarter, pressuring shares that have surged more than 36% so far this year.
"We continue to build with an eye towards the future, optimizing our products for new customer segments and geographies, introducing Rider Verification nationwide to increase safety for drivers, and launching shuttles to airports and venues," said CEO Dara Khosrowshahi. "And of course, we continue to advance our autonomous strategy, demonstrating how Uber can help unlock this exciting technology for the world.”
Uber shares were marked 5.6% lower in premarket trading to indicate an opening bell price of $75.14 each.
$UBER | Uber is -4.3% in the pre-market after topping earnings and revenue estimates and providing strong Q4 guidance.
— CMG Venture Group (@CmgVenture) October 31, 2024
🔹 EPS: $11.19 vs. $5.22 est. ✅
🔹 Revenue: $11.19B vs. $10.99B est. ✅ pic.twitter.com/EgZiFOjTTL
Stock Market Today
Stocks ended lower yesterday, with the S&P 500 slipping 19 points to trim its October gain to less than 1%, amid more megacap tech stock declines and a surge higher in Treasury bond yields tied to stronger-than-expected jobs data and a solid reading of third-quarter GDP.
Overnight earnings from Meta Platforms (META) and Microsoft (MSFT) , meanwhile, underscored the massive costs linked to the expansion of AI technologies and the toll that is taking on profit margins across the world's biggest tech companies.
Amazon (AMZN) , as well as Apple (AAPL) , will also report September-quarter updates after the close of trading, with the former also expected to update on capital spending plans and the latter likely to offer detail on demand for its newly launched iPhone 16.
TheStreet
In the bond market, benchmark 10-year note yields are holding near the highest levels since early July, and were last marked at 4.288%, following yesterday's ADP jobs data and today's PCE inflation report at 8:30 a.m. U.S. Eastern Time.
Renewed inflation concerns, tied in part to the outperforming economy but also to the added borrowing that is likely to come from either winner in next week's presidential election, has also lifted rate-sensitive 2-year notes to a multimonth high of 4.174%.
Related: Meta earnings blast forecasts, but Facebook parent sees big capex increase
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, was last marked 0.05% higher on the session at 104.04 and on pace for its best monthly gain in two years.
Heading into the start of the trading day on Wall Street, sharp pullbacks for Meta and Microsoft are helping shave around 210 points from the Nasdaq at the opening bell, with the Dow Jones Industrial Average called 225 points to the downside.
The S&P 500, which is now up 0.89% heading into the final trading day of October, is priced for a 45-point opening-bell decline.
In overseas markets, Europe's Stoxx 600 fell 0.71% in early Frankfurt trading, extending the benchmark's decline to a third session, while Britain's FTSE 100 fell 0.76% following yesterday's Labour budget statement, which included a massive increase in public spending and the biggest tax increases since 1993.
More Wall Street Analysts:
- Analysts update Meta stock price target with Q3 earnings in focus
- Analysts update outlook for Nvidia's Blackwell chips amid AI boom
- Analyst reboots Reddit stock price target ahead of earnings
Overnight in Asia, the Bank of Japan held its key lending rates steady following a two-day policy meeting in Tokyo, while the Nikkei 225 slipped 0.5% into the close of trading as the yen held steady at 152.48 against the U.S. dollar.
The regional MSCI ex-Japan benchmark, meanwhile, was marked 0.44% lower heading into the final hours of trading.
Related: Veteran fund manager sees world of pain coming for stocks
