The S&P 500 Index ($SPX) (SPY) Thursday closed down -1.86%, the Dow Jones Industrials Index ($DOWI) (DIA) closed down -0.90%, and the Nasdaq 100 Index ($IUXX) (QQQ) closed down -2.44%.
Stocks on Thursday sold off sharply, with the S&P 500 and Nasdaq 100 posting 3-week lows and the Dow Jones Industrials posting a 6-week low. Disappointing guidance from Microsoft and Meta Platforms weighed on tech stocks and market sentiment. Stocks maintained their losses after Thursday’s mixed US economic news. Weekly initial unemployment claims unexpectedly fell to a 5-month low, Sep personal spending rose more than expected, and the Sep core PCE price index was unchanged from Aug at +2.7% y/y.
However, stocks found some support Thursday on falling wage pressures after the Q3 employment cost index eased to the slowest growth rate in 3 years. Also, Thursday’s stronger-than-expected economic news bolstered the outlook for a soft landing.
On the positive side, Paycom Software rose more than +21% after reporting better-than-expected Q3 revenue and raising the lower end of its full-year revenue forecast. Also, Booking Holdings closed up more than +4% after reporting stronger-than-expected Q3 gross bookings. In addition, Etsy closed up more than +7% after reporting Q3 revenue above consensus.
US weekly initial unemployment claims unexpectedly fell -12,000 to a 5-month low of 216,000, showing a stronger labor market than expectations of an increase to 230,000.
The US Q3 employment cost index rose +0.8% q/q, weaker than expectations of +0.9% q/q and the slowest pace of increase in 3 years.
US Sep personal spending rose +0.5% m/m, stronger than expectations of +0.4% m/m. Sep personal income rose +0.3% m/m, right on expectations.
The US Sep core PCE price index was unchanged from Aug at +2.7% y/y, stronger than expectations of +2.6% y/y.
The US Oct MNI Chicago PMI unexpectedly fell -5.0 to a 5-month low of 41.6, weaker than expectations of an increase to 47.0.
Caution in the markets persists ahead of earnings from Amazon and Apple after Thursday’s close. Also, the markets await Friday's US Oct unemployment report (Oct nonfarm payrolls expected +105,000 on strike and storm disruptions; Oct unemployment rate expected unchanged at 4.1%) and next Tuesday's US election.
Corporate Q3 earnings season is in its peak week. Of the companies in the S&P 500 that have released earnings so far, 76% surpassed estimates. According to Bloomberg Intelligence, companies in the S&P 500 are expected to report an average +4.3% y/y increase in quarterly earnings in Q3, down from the +7.9% y/y growth consensus seen in July.
The markets are discounting the chances at 94% for a -25 bp rate cut at the November 6-7 FOMC meeting and at 0% for a -50 bp rate cut at that meeting.
Overseas stock markets Thursday settled mixed. The Euro Stoxx 50 fell to a 1-1/2 month low and closed down -1.19%. China's Shanghai Composite Index closed up +0.42%. Japan's Nikkei Stock 225 closed down -0.50%.
Interest Rates
December 10-year T-notes (ZNZ24) Thursday closed down -7 ticks. The 10-year T-note yield fell -0.4 bp at 4.276%. T-notes Thursday fell moderately on negative carryover from a slide in European government bonds. T-note prices were also weighed down by Thursday’s economic news that showed US weekly jobless claims unexpectedly fell to a 5-month low and the Sep core PCE price index rose more than expected, hawkish factors for Fed policy. T-notes continue to be undercut by the idea that the US budget deficit will continue to be a major problem regardless of who wins next week's presidential election. Losses in T-notes were limited as wage pressures eased after the Q3 employment cost index eased to the slowest growth rate in 3 years.
European government bond yields Thursday moved higher. The 10-year German bund yield climbed to a 3-month high of 2.448% and finished up +0.2 bp to 2.390%. The 10-year UK gilt yield rose to a 10-3/4 month high of 4.531% and finished up +9.4 bp to 4.446%.
The Eurozone Sep unemployment rate was unchanged at a record low of 6.3%, showing a stronger labor market than expectations of an increase to 6.4%.
Eurozone Oct CPI rose +2.0% y/y, stronger than expectations of +1.9% y/y. Oct core CPI rose +2.7% y/y, stronger than expectations of +2.6% y/y.
German Sep retail sales unexpectedly rose +1.2% m/m, stronger than expectations of a -0.6% m/m decline.
ECB Governing Council member Panetta said, "Monetary conditions are still tight," and the ECB must continue to lower borrowing costs to keep inflation from undershooting.
Swaps are discounting the chances at 100% for a -25 bp rate cut by the ECB at its December 12 policy meeting and at 25% for a -50 bp rate cut at the same meeting.
US Stock Movers
Microsoft (MSFT) closed down more than -5% to lead losers in the Dow Jones Industrials despite reporting better-than-expected Q1 EPS since it reported that Q1 Azure cloud revenue rose +34%, down slightly from +35% growth in Q4 and forecasted Q2 Azure cloud revenue growth of +31% to +32%.
Chip stocks retreated Thursday and weighed on the overall market. GlobalFoundries (GFS), NXP Semiconductors NV (NXPI), and ON Semiconductor (ON) closed down more than -4%. Also, Nvidia (NVDA), KLA Corp (KLAC), Broadcom (AVGO), Micron Technology (MU), Lam Research (LRCX), and Marvell Technology (MRVL) closed down more than -3%.
Meta Platforms (META) closed down more than -4% despite reporting better-than-expected Q3 EPS after it didn’t forecast its 2025 capital expenditure plans and just talked about “continued investment.”
Huntington Ingalls Industries (HII) closed down more than -26% to lead losers in the S&P 500 after reporting Q3 EPS of $2.56, well below the consensus of $3.85.
Estee Lauder (EL) closed down more than -20% after forecasting Q2 adjusted EPS of 20 cents-35 cents, well below the consensus of $1.05. The company also withdrew its 2025 fiscal outlook and cut its dividend to 35 cents per share from 66 cents.
Super Micro Computer (SMCI) closed down more than -11% to lead losers in the Nasdaq 100, adding to Wednesday’s -32% plunge, after accounting firm Ernst & Young LLP resigned as SMCI’s auditor amid a US Justice Department probe of the company’s accounting practices.
MGM Resorts International (MGM) closed down more than -10% after reporting Q3 adjusted EPS of 54 cents, below the consensus of 59 cents.
eBay (EBAY) closed down more than -8% after forecasting Q4 revenue of $2.53 billion-$2.59 million, weaker than the consensus of $2.64 billion.
Arm Holdings (ARM) closed down more than -8% after Bernstein downgraded the stock to underperform from market perform with a price target of $100.
Paycom Software (PAYC) closed up more than +21% to lead gainers in the S&P 500 after reporting Q3 revenue of $451.9 million, better than the consensus of $447.2 million, and raising the lower end of its full-year revenue forecast to $1.87 billion from a previous forecast of $1.86 billion-$1.88 billion.
International Paper (IP) closed up more than +13% after reporting Q3 adjusted operating EPS of 44 cents, well above the consensus of 25 cents.
Etsy (ETSY) closed up more than +7% after reporting Q3 revenue of $662.4 million, better than the consensus of $652.4 million.
Norwegian Cruise Line Holdings Ltd (NCLH) closed up more than +6% after reporting Q3 adjusted Ebitda of $931 million, better than the consensus of $876.9 million, and raising its full-year adjusted Ebitda forecast to $2.43 billion from a prior forecast of $2.35 billion, stronger than the consensus of $2.36 billion.
Booking Holdings (BKNG) closed up more than +4% after reporting Q3 gross bookings of $43.4 billion, stronger than the consensus of $41.37 billion.
Carvana (CVNA) closed up more than +19% after reporting Q3 vehicle unit sales of 108,651, well above the consensus of 106,702.
Confluent (CFLT) closed up more than +13% after reporting Q3 adjusted EPS of 10 cents, above the consensus of 5.2%, and raised its full-year adjusted EPS forecast to 25 cents from 19 cents to 20 cents, stronger than the consensus of 21 cents.
Earnings Reports (11/1/2024)
Cardinal Health Inc (CAH), Cboe Global Markets Inc (CBOE), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Dominion Energy Inc (D), Exxon Mobil Corp (XOM), LyondellBasell Industries NV (LYB), Monster Beverage Corp (MNST), PPL Corp (PPL), Simon Property Group Inc (SPG), T Rowe Price Group Inc (TROW), Waters Corp (WAT).
More Stock Market News from Barchart
- Dollar Finishes Little Changed on Euro Strength
- Check Out This Chart of Root After the Stock Surged 191% Today
- SpaceX's Elon Musk Invites Everyone to Mars but Warns It Will Be a 'Dangerous and Uncomfortable' Voyage
- 3 Mega-Cap Tech Stocks Cathie Wood is Buying Instead of Tesla
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.
/Semiconductor%20by%20Gorodenkoff%20via%20Shutterstock.jpg)
/An%20image%20of%20a%20Tesla%20humanoid%20robot%20in%20front%20of%20the%20company%20logo%20Around%20the%20World%20Photos%20via%20Shutterstock.jpg)
