S&P 500, Nasdaq slip as Dow ends higher on mixed earnings picture

NEW YORK, Oct 27 (Reuters) – The S&P 500 and Nasdaq posted losses on Thursday as investors faced strong economic data and mixed earnings.

The price-weighted Dow Jones rose, supported by industrials (.SPLRCI), while weakness in tech and tech-adjacent megacaps depressed the S&P 500 and Nasdaq following pessimistic quarterly results and poor forecasts .

“It really is a bifurcated market, a tale of two cities,” said Tim Ghriskey, senior portfolio strategist for Ingalls & Snyder in New York.

“There’s a lot of pressure on tech and tech-plus names, the fastest-growing names,” Ghriskey added. “On the other hand, you see a lot of strength in other sectors, especially consumer staples, energy, financials, industrials and utilities.”

After the bell, Amazon (AMZN.O) fell 12%, wiping more than $100 billion from its stock market value after the retail and tech heavyweight forecast slower sales growth for the holiday season, disappointing Wall Street and warning that inflation-conscious consumers and businesses had less money to spend.

That sent S&P 500 futures down 0.5% and Nasdaq futures down 0.6%, showing traders expect Wall Street to open lower on Friday.

During Thursday’s trading session, Meta Platforms (META.O) plunged 24.6% after Facebook’s parent company followed the trend set by Microsoft Corp (MSFT.O) and Alphabet Inc (GOOGL. O) by providing dark indications.

But heavy equipment maker Caterpillar Inc (CAT.N) reported better-than-expected quarterly earnings, sending its shares jumping 7.7% and providing the most power ahead of the Dow Jones.

A third-quarter GDP reading showing the US economy returned to growth in the July-September period, along with steady quarterly core inflation helped dampen earnings.

Investors continue to scan the economic horizon for evidence that the Federal Reserve’s barrage of aggressive interest rate hikes, which began in March, is beginning to have its intended effect in cooling the economy.

While a 75 basis point rate hike at the end of its November 1-2 policy meeting is all but assured, the probability of a smaller 50 basis point hike in December was 55%, according to the report. CME’s FedWatch tool.

“The dominant theme is really the Fed. The Fed is going to control the direction of this market over the next few months,” Ghriskey added.

As of Thursday’s close, the Dow Jones Industrial Average (.DJI) was up 194.17 points, or 0.61%, at 32,033.28, the S&P 500 (.SPX) was down 23.3 points, or 0.61%, to 3,807.3 and the Nasdaq Composite (.IXIC) fell 178.32 points, or 1.63%, to 10,792.68.

Among the 11 major sectors of the S&P 500, industrials posted the biggest percentage gain, with communication services (.SPLRCL), weighted by Meta, being the biggest decliners.

The third quarter reporting season is moving full speed ahead, with 227 of the S&P 500 companies reporting. Of these, 74% exceeded consensus estimates.

Analysts now forecast overall S&P earnings growth of 2.5%, down from 4.5% in early October.

“In general, we saw earnings meet or slightly exceed expectations,” Ghriskey said. “But those expectations were scaled back throughout the quarter.”

McDonald’s Corp (MCD.N) gained 3.3% after the fast-food chain beat quarterly same-store sales estimates.

Shares of Southwest Airlines Co (LUV.N) rose 2.7% after the carrier’s quarterly profit beat consensus estimates.

Also after the bell, Intel (INTC.O) rose 5% after the chipmaker slashed its full-year profit and revenue forecast and said it was targeting $3 billion in price cuts. costs in 2023.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.18 to 1; on the Nasdaq, a 1.10-to-1 ratio favored decliners.

The S&P 500 posted 23 new 52-week highs and 12 new lows; the Nasdaq Composite recorded 93 new highs and 119 new lows.

Volume on U.S. exchanges was 11.36 billion shares, compared to an average of 11.59 billion over the past 20 trading days.

Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru and Noel Randewich in Oakland, California; Editing by Cynthia Osterman

Our standards: The Thomson Reuters Trust Principles.