(Bloomberg) – Amazon.com Inc.’s turmoil followed its earnings report, and the tech giant’s rally petered out by midnight. Intel rose after the earnings report, while Ford Motor Co. fell after disappointing numbers.
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The $192 billion exchange-traded fund (ETF) that tracks the Nasdaq 100 (QQQ) was little changed in late trading. Tech stocks fell nearly 2% on Thursday. The decline also brought the S&P 500 index down nearly 10% from its July high, putting it on the brink of a “correction.” U.S. Treasury yields fell as traders continued to bet on a Fed pause on economic data that suggested inflation pressures continued to dissipate despite solid growth. .
Read: How low can it go? Nasdaq’s decline approaches bottom
Gail Lord, head of global equities at Federated Hermès, said: “Typical cyclical stocks that have held up well under difficult circumstances are beginning to creaky under pressure, leaving much to be desired in earnings season.” ” That’s no longer enough for these economically sensitive stocks to gain momentum as investors worry about the weak macroeconomic backdrop. ”
Traders are also closely monitoring geopolitical developments, with the Israeli military announcing it has killed Hamas’ acting intelligence chief responsible for helping plan the October 7 attack. The military also carried out limited ground raids into northern Gaza overnight. Crude oil fell below $84 per barrel. The euro weakened slightly after the European Central Bank left interest rates unchanged as expected.
The yield on the two-year Treasury note, which is sensitive to impending Fed action, fell 8 basis points to 5.04%. The swap contract projects a 32% chance that the Fed will raise rates one more time during the current tightening cycle.
Treasury Secretary Janet Yellen said the spike in long-term Treasury yields in recent months reflects a strong economy and expectations that interest rates will need to remain high for an extended period of time.
According to a survey conducted by 22V Research, 71% of investors surveyed do not believe the 10-year Treasury yield, which recently hit 5%, has peaked. We expect the increase to continue going forward, with a median expected peak of 5.5%. 19% think yields will peak at 6% or above.
“Stock markets aren’t ready to go up until bond yields come down significantly, and they probably won’t go up until inflation gets pretty close to the Fed’s target,” said Edward Moya, senior market analyst for the Americas at Oanda. Deaf,” he said.
The U.S. economy grew at the fastest pace in about two years last quarter on the back of a sharp rise in consumer spending. A closely watched indicator of underlying inflation has cooled more than expected, hitting the slowest pace since 2020.
Wall Street’s reaction to GDP:
“It doesn’t move us towards the November FOMC meeting, but it’s certainly a skip. Go higher, yes. Go higher and hike.”
“While interest rates may likely remain unchanged next week, today’s stronger than expected economic data also means the Fed’s hawkish stance remains unchanged.”
“A recession is still not out of the question. But as the days go by and the data improves, it certainly looks like the Fed is achieving a soft landing with minimal damage to the economy. Investors in the broader market can take some comfort in the fact that the worst-case scenario is unlikely.”
“While these numbers are the latest in a series of indicators of economic resilience, investors will remain aware that the risk of recession remains.
“If the recession people have been predicting for the past 18 months does not materialize this year, and current economic trends continue, the market will rebound from the lows as it did at the end of last year.”
Company highlights:
Mastercard fell after the payment network’s next sales growth forecast fell short of analysts’ expectations, even as consumers continued to weather rising interest rates with strong card spending.
Western Digital fell into financial trouble after deal negotiations with Kioxia Holdings collapsed, dashing hopes for the two companies’ flash memory business integration.
Hasbro Inc.’s sales and earnings fell after it reported quarterly results that fell short of Wall Street expectations and cut its full-year sales forecast due to a slump in the plush toy market heading into the holiday season.
Harley-Davidson’s performance was weak as profits fell short of expectations and sales fell due to higher U.S. borrowing costs and the global economic downturn.
Comcast Corp. pulled out after reporting declines in broadband and cable subscribers and predicting further losses.
Hertz Global Holdings fell after missing profit estimates in 2022 as it grappled with higher vehicle depreciation costs, which were unusually low.
International Business Machines rose after reporting better-than-expected sales and affirming its full-year outlook, suggesting the company’s focus on software and hybrid cloud services is paying off.
First Citizens Bancshares, the regional lender that Silicon Valley Bank acquired when it collapsed in March, said deposits exceeded expectations, supported by growth in its direct banking channel. Stock prices rose.
Bunge rose after reporting third-quarter profit that beat top expectations and raising its earnings outlook.
This week’s main events:
China’s industrial profits Friday
Japan Tokyo CPI, Friday
US PCE Deflators, Personal Expenditures and Income, University of Michigan Consumer Sentiment, Friday
ExxonMobil Friday earnings
The main movements in the market are:
stock
As of 4 p.m. New York time, the S&P 500 was down 1.2%.
Nasdaq 100 fell 1.9%
The Dow Jones Industrial Average fell 0.8%.
MSCI World Index falls 1.1%
currency
Bloomberg Dollar Spot Index little changed
The euro was almost unchanged at $1.0556.
The British pound was almost unchanged at $1.2121.
The Japanese yen fell 0.1% to 150.42 yen to the dollar.
cryptocurrency
Bitcoin fell 1.8% to $34,048.4.
Ether rose 0.2% to $1,791.9
bond
The 10-year Treasury yield fell 11 basis points to 4.84%.
Germany’s 10-year bond yield fell 3 basis points to 2.86%.
UK 10-year bond yields fell 1 basis point to 4.60%.
merchandise
This article was produced in partnership with Bloomberg Automation.
–With assistance from Isabel Lee and Michael McKenzie.
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