Wall Street fell again on Thursday as investors digested a slew of mixed quarterly earnings and U.S. economic data showing signs of resiliency that could encourage the Federal Reserve to keep interest rates at a restrictive level for longer than expected.
All three major U.S. stock indexes were red. The tech-heavy Nasdaq was down the most, weighed down by interest rate sensitive momentum stocks in the face of cloudy earnings guidance and the “higher for longer” interest rate scenario.
The NYSE FANG+ index of momentum stocks (.NYFANG) was last down 2.3%.
All three indexes have set a course for weekly declines.
“We’re seeing a lot of pressure from a slew of corporate earnings that missed the mark in terms of investor expectations, particularly from the companies that drove a lot of the strength and the equity markets earlier this year,” said Greg Bassuk, chief executive officer at AXS Investments in New York.
Third quarter reporting season has shifted into overdrive and is nearing its halfway point, with nearly a third of the companies in the S&P 500 slated to post results this week.
At last glance, roughly four in five companies were beating earnings estimates. Analysts’ most recent estimates call for aggregate year-on-year S&P 500 earnings growth of 2.6%, according to LSEG.
A swath of robust data included a 4.9% quarterly annualized jump in third-quarter GDP, the strongest reading in nearly two years, feeding investor worries about restrictive Fed policy.
Investors were “digesting the economic data through the lens of an aggressive Federal Reserve ... it challenges the notion that the Fed will start lowering rates in 2024,” Bassuk added.
“Ironically, while the numbers are strong they exacerbate investor concerns about the Fed staying higher for longer with respect to interest rates.”
At 2:10 p.m. ET, the Dow Jones Industrial Average (.DJI) fell 156.93 points, or 0.48%, to 32,879, the S&P 500 (.SPX) lost 37.69 points, or 0.90%, to 4,149.08 and the Nasdaq Composite (.IXIC) dropped 194.22 points, or 1.51%, to 12,627.00.
Of the 11 major sectors in the S&P 500, communication services (.SPLRCL) was down the most, while real estate (.SPLRCR) had the biggest percentage gain.
Meta Platforms (META.O) beat third quarter revenue and profit expectations, but forecast 2024 spending will exceed analyst forecasts and suggested the Israel conflict could dampen fourth quarter sales. Its shares fell 3.7%.
United Parcel Service (UPS.N) lowered its revenue forecast for 2023, sending its shares down 4.7%.
Chipmaker Western Digital Corp slid 9.6% merger talks with Japan’s Kioxia Holdings were called off.
IBM (IBM.N) jumped 4.3% following its consensus-beating quarterly report, buoyed by solid demand for its software solutions.
Amazon.com (AMZN.O) dipped 1.5% ahead of its results expected after the closing bell.
Advancing issues outnumbered declining ones on the NYSE by a 1.01-to-1 ratio; on Nasdaq, a 1.12-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 35 new lows; the Nasdaq Composite recorded 11 new highs and 379 new lows.