The Dow Jones declined 0.2%, S&P 500 fell 0.3% and the Nasdaq Composite fell 0.6%, led lower by a fall in chip companies like Nvidia, AMD and a 33% drop in shares of Super Computers.
Investors also digested third quarter US GDP data, which came in at 2.8% annualised, compared to estimates of 3.1%. Traders trimmed bets on policy easing after data showing the US economy expanded at a robust pace in the third quarter as household purchases accelerated ahead of the election and the federal government ramped up defense spending. A measure of underlying inflation rose 2.2%, roughly in line with the Federal Reserve’s target.
A $300 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) extended losses after the close of regular trading as Meta’s spending guidance failed to enthuse investors. That’s even after a sales beat. Microsoft rose as its cloud-computing business and Office software fueled stronger-than-projected quarterly revenue growth. EBay Inc. dropped after projecting holiday season sales that fell short of analysts’ estimates.
“Solid but not blistering growth fits nicely within the current economic backdrop,” said Bret Kenwell at eToro. “It’s far better to have a strong economy and earnings driving stocks higher rather than hopes of easing monetary policy from the Fed,” he said.
Selling by mutual funds — typically the biggest offloader of stocks — is fading into the end of the month. That’s set to reverse, with November typically seeing inflows into equities, while at the same time the corporate buyback window is re-opening with an estimate of $6 billion of buying every single day in November, according to Scott Rubner, a managing director for global markets and tactical specialist at Goldman Sachs.
“In terms of US equities ahead of elections next week, we are still watching the 5,750-5,800 zone for the S&P 500,” said Dan Wantrobski at Janney Montgomery Scott. “Measuring implications from recent bullish patterns still imply a target range of 6,200. However, we remain concerned regarding stubborn overbought/extended conditions on the longer-term charts.”
He says the index is still vulnerable to a “bigger correction” heading into year-end or (more likely) in the first quarter of 2025.
Tech earnings continues on Thursday with results from tech giants Apple and Amazon, Uber, Merck and Intel. Weekly jobless claims and core PCE data will also be reported today.
(With Inputs From Agencies.)