Stock market today: Microsoft drags Wall Street lower under the burden of high expectations
AP Business Writer
NEW YORK (AP) — Wall Street is feeling the downside of high expectations on Thursday, as Microsoft and Meta Platforms lead U.S. stock indexes lower despite delivering stronger-than-expected profits for the summer.
The S&P 500 was down 0.8% in early trading and slipping further from its record set earlier this month. The Dow Jones Industrial Average was down 177 points, or 0.4%, as of 9:36 a.m. Eastern time, while the Nasdaq composite was 1.3% lower and on track for a second straight loss after setting its latest all-time high.
Microsoft reported bigger profit growth for the latest quarter than analysts expected. Its revenue also topped forecasts, but its stock nevertheless sank 4.9% as investors and analysts scrutinized for possible disappointments. Many centered on Microsoft’s forecast for growth this quarter in its Azure cloud-computing business, which fell short of some analysts’ expectations.
The parent company of Facebook, meanwhile, likewise served up a better-than-expected profit report. For it, investors focused on Meta Platforms’ warning that it expects a “significant acceleration” in spending next year as it continues to pour money into developing artificial intelligence. It slipped 0.7%.
Both Microsoft and Meta Platforms have soared in recent years, in large part on excitement around AI, and are entrenched among Wall Street’s most influential stocks. But such stellar performances also have critics saying their stock prices have simply climbed too fast, leaving them too expensive.
It’s difficult to meet everyone’s expectations when they’re very high, and Microsoft was Thursday’s heaviest weight on the S&P 500 by far.
The next two companies in the highly influential group of stocks known as the “Magnificent Seven” to deliver their latest results are Apple and Amazon. They’re set to report after trading ends for the day, and both were also slipping. Earlier, Tesla and Alphabet kicked off the Magnificent Seven’s reports with results that investors found impressive enough to reward with higher stock prices.
In the bond market, Treasury yields continued their climb following a mixed set of reports on the U.S. economy.
One report said a measure of inflation that the Federal Reserve likes to use slowed to 2.1% in September from 2.3%. That’s almost all the way back to the Fed’s 2% target, but underlying trends after ignoring food and energy costs were a touch hotter than economists expected.
A separate report said growth in workers’ wages and benefits slowed during the summer. That could put less pressure on upcoming inflation. A third report, meanwhile, said fewer U.S. workers applied for unemployment benefits last week. That’s an indication that the number of layoffs remains relatively low across the country.
Treasury yields swiveled up and down several times following the reports. The yield on the 10-year Treasury was most recently sitting at 4.30%, where it was late Wednesday. That’s up sharply from the roughly 3.60% level it hit last month.
Yields have been rallying following a string of stronger-than-expected reports on the U.S. economy. Such data have bolstered hopes that the economy can avoid a recession, particularly now that the Fed is cutting interest rates to support the job market instead of keeping them high to quash high inflation. But the resilient economy also is forcing traders to curtail their expectations for how deeply the Fed will ultimately cut.
In stock markets abroad, indexes were lower across much of Europe and Asia.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
