S&P futures were down 0.8% Thursday morning, following Wednesday’s U.S. market decline led by semiconductor, pharma, and QSR sectors. Big tech stocks were mixed, with Alphabet (GOOGL) gaining strongly on earnings, while Microsoft (MSFT) and Meta (META) were pressured by Azure guidance and increased capex scrutiny, respectively. Asian markets were mixed overnight, with declines in Japan and Hong Kong but gains in Mainland China, while European markets traded 0.6% lower.
Treasuries held steady, and the dollar index was mostly unchanged. Yen strength was notable on hawkish signals from the Bank of Japan, while gold dipped by 0.4%, and Bitcoin futures were down 0.9%. Crude oil edged up 0.1%. Defensive sentiment is largely driven by subdued reactions to recent “Magnificent 7” earnings, though the broader AI growth outlook remains intact. Political uncertainty continues to weigh on risk sentiment, and bond yields remain elevated amid resilient economic indicators.
Key economic data releases on Thursday include September’s personal income/spending and PCE inflation, October’s Chicago PMI, and Q3 employment cost index (ECI), followed by Friday’s employment report. October non-farm payrolls (NFP) are expected to show a 120,000 increase, with the unemployment rate steady at 4.1%. Average hourly earnings are forecasted to rise 0.3%, while the average workweek should hold at 34.2 hours.
U.S. equities closed lower across the board on Thursday, with the Dow down by 0.22%, the S&P 500 by 0.33%, and the Nasdaq by 0.56%. The Russell 2000 also fell by 0.23%, reflecting broad-based declines. Following a midday sell-off, markets ended near their lowest levels. The day’s trading showed mixed results among sectors, with notable weaknesses in pharmaceuticals, semiconductors, quick-service restaurants (QSRs), industrial metals, auto suppliers, and casinos. Major earnings reports were a focal point, with more than half of the S&P 500 constituents now having reported. Google’s (GOOGL) upbeat results, particularly around Cloud and AI, stood out, contrasting with underwhelming guidance from AMD and other semis.
Economic data further drove sentiment. ADP private payrolls exceeded expectations with 233,000 additions, well above the 108,000 forecast. Q3 GDP grew at a 2.8% annualized rate, supported by consumer spending, exports, and federal government expenditures, signaling resilience in the economy. September pending home sales also beat expectations, rising 7.4% month-over-month. Treasury yields saw mixed moves with a curve flattening, and WTI crude oil increased by 2.1%. Election uncertainty continues to influence investor sentiment.
Individual Stock Highlights by Sector
Information Technology
- Advanced Micro Devices (AMD) slid 10.6%, as its guidance fell short due to expected weakness in Embedded and Gaming, partially offset by strength in Data Centers.
- Qorvo (QRVO) fell 27.3% on weak guidance, impacted by a mix shift within Android towards lower-end phones.
- Super Micro Computer (SMCI) tumbled 32.7% after its auditor resigned, creating uncertainty about financial reporting.
Health Care
- Eli Lilly (LLY) declined 6.3%, missing on Q3 earnings due to weaker-than-expected Zepbound sales and heightened competition.
- Humana (HUM) rose 3.3% following strong Q3 earnings, with membership levels surpassing consensus, though some analysts flagged concerns for 2025.
Communication Services
- Alphabet (GOOGL) rose as its cloud and AI segments outperformed expectations, bolstering the stock.
- Reddit (RDDT) surged 42% after Q3 revenue and EBITDA far exceeded expectations, driven by engagement and new advertising initiatives.
- Snap (SNAP) rose 15.7%, with revenue and daily active user metrics beating estimates; its Q4 DAU guidance also surprised positively.
- Electronic Arts (EA) reported a positive Q3 with strong net bookings, especially in its American Football segment, raising FY25 guidance.
Industrials
- Caterpillar (CAT) declined 2.1% following a miss on earnings, largely due to reduced sales volume and lower dealer inventories.
- XPO (XPO) rose 11.4% with a notable EBITDA beat, driven by strength in its North American LTL business.
- Trane Technologies (TT) slipped 3.9%, despite a Q3 beat, due to soft bookings and China weakness.
- Otis Worldwide (OTIS) fell 3.1% following Q3 misses on earnings and organic growth, impacted by weaker-than-expected results in China
Consumer Discretionary
- Cheesecake Factory (CAKE) advanced 8.8% on a strong Q3 earnings beat, with in-line comps and positive analyst sentiment around restaurant-level margins.
- Wingstop (WING) fell 21.4% after missing Q3 EPS, influenced by high SG&A costs and moderated comp guidance for Q4.
- Chipotle Mexican Grill (CMG) dropped 7.9%, despite a 6% growth in comps, as analysts expressed concerns over restaurant margins for Q4.
Financials
- Visa (V) increased 2.9%, with better-than-expected revenue and EPS, driven by strong consumer spending trends and October transaction growth.
Materials
- Axalta Coating Systems (AXTA) gained 8.2%, raising its FY EBITDA guidance and showing improved execution despite challenging macro conditions.
- Vulcan Materials (VMC) rose 6.4%, as its Q3 earnings were slightly below consensus, though strong pricing power and favorable demand were noted.
Energy
- WTI Crude was up 2.1%, supporting energy stocks as macro conditions indicated sustained demand.
Eco Data Releases | Thursday October 31st, 2024
S&P 500 Constituent Earnings Announcements | Thursday October 31st, 2024
Data sourced from FactSet Research Systems Inc.
