Miguel Santiago
US stocks fell on Thursday after a period of fluctuation, with the big news once again of weakness in the technology sector following further disappointment from another member of the “Magnificent Seven” club.
Investors also digested the first estimate for the US third quarter. GDP growth, which showed the economy grew at its fastest pace since the fourth quarter of 2021.
At midday, the benchmark S&P 500 (SP500) index was down 0.72% to 4,156.69 points, while the leading Dow (dji) was down 0.35% to 32,919.18 points.
The Nasdaq Composite (IND COMP.) fell 1.27% to 12,657.92 points, adding to its drop from the previous session in which the indicator recorded its worst intraday performance since the end of February and entered correction territory. The Nasdaq 100 index (NDX), even more focused on technology fell 1.41% to 14,178.61 points, after registering its biggest defeat of 2023 on Wednesday.
“In reality, stocks have been falling for months, and Wednesday was not a turnaround, but simply the end of QQQ and SPX providing a mirage and camouflage the weakness that has been ongoing in US stocks,” said Mark Newton , managing director and global head. of technical strategy at Fundstrat Global Advisors, said on X (formerly Twitter).
Meta Platforms (META) was a big drag on tech indices on Thursday, with the Facebook owner retreating more than 3%. The social media giant provided cautious comments on the future, noting that volatility in the macroeconomic environment could have a big impact on the advertising market next year. Meta’s (META) results come a day after Alphabet’s (GOOG) (GOOGL) stock fell nearly 10% due to disappointing cloud performance.
The reaction received by the tech titans is evidence of concerns among market participants around overvaluation. Gains in mega-cap tech stocks have been one of the main drivers of the stock’s rally in 2023.
“I sense that (Wednesday’s) pause will cause many to change their tune, and the downward acceleration in some tech stocks could cause the much-needed capitulation in both volume and breadth that will be necessary to cause an escalation in bearish sentiment.” Fundstrat’s Newton added.
There were plenty of other earnings-related moves on Thursday. Align technology (ALGN) was the top percentage loser on both the S&P 500 (SP500) and Nasdaq (COMP.IND), after the dental products maker missed its quarterly revenue and results and lowered its revenue guidance . Comcast (CMCSA) was also one of the biggest losers after the media and telecommunications company shed broadband customers and video subscribers.
Cigarette giant Altria (MO) fell after lowering its full-year adjusted profit forecast. Credit card issuer Mastercard (MA) fell after its quarterly gross volume missed consensus. United Parcel Service (UPS), considered a global economic benchmark, fell due to a weak outlook.
Turning to the economic calendar on Thursday, the US Bureau of Economic Analysis released its advance estimate for GDP growth in the third quarter, which increased to an annual rate of 4.9% versus an expectation of +4, 2%. The increase was also significantly higher than the 2.1% GDP growth seen in the second quarter.
The report showed that the US economy was advancing at a strong pace despite the Federal Reserve’s attempts to cool down by aggressively tightening monetary policy. One bright spot is that the core personal consumption expenditures price index (the Fed’s preferred inflation gauge) came in at +2.4% in the third quarter, lower than the forecast of +2. .5% and +3.7% in the second quarter.
“U.S. economic growth accelerated in the third quarter to an annualized pace of 4.9%, indicating that the economy remains resilient in the face of higher rates and still elevated prices. While persistent strength in demand could jeopardize lower inflation, we don’t anticipate “This report changes a lot for policymakers and we expect the FOMC to leave rates unchanged at next week’s meeting,” said Wells Fargo’s Tim Quinlan.
Thursday’s economic data also saw the number of Americans filing initial unemployment claims in the past week rise to 210,000, suggesting some cracks in the highly resilient labor market.
Treasury yields were lower. The 30-year yield (US30Y) fell 5 basis points to 5.04%, while the 10-year yield (US10Y) fell 6 basis points to 4.90%. The more rate-sensitive short-term 2-year yield (US2Y) fell 7 basis points to 5.05%.
See live data on how Treasury yields are performing across the curve on the Seeking Alpha bonds page.
