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Market Snapshot: Tech sector leads U.S. stocks lower following soft Amazon, Apple results

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U.S. stocks traded mostly lower in the final trading session of the week and month, as investors reacted to disappointing results from heavyweights Amazon.com Inc. and Apple Inc.

How are stock-market indexes trading?
  • The Dow Jones Industrial Average
    DJIA,
    +0.17%

    fell 59.70 points, or 0.2%, to 35,670.78.
  • The S&P 500
    SPX,
    -0.06%

    declined 16.08 points, or 0.4%, to 4,580.34.
  • The Nasdaq Composite Index
    COMP,
    -0.22%

    declined 74.42 points, or 0.5%, to 15,373.70.

For the week, the Dow is on track for a gain of 0.3%, the S&P 500 is set for a 0.7% weekly advance, while the Nasdaq Composite was looking at a 1.6% gain.

What’s driving the market?

The S&P 500 and Nasdaq closed at records on Thursday, lifted by earnings news and hopes for a congressional spending deal as investors shook off a disappointing third-quarter economic growth report, but downbeat results from two big technology companies were weighing on Friday’s action.

Reporting late Thursday, Apple
AAPL,
-3.30%

missed revenue expectations for the first time since late 2018, amid slower-than-expected sales of iPhones and wearables. Amazon.com
AMZN,
-3.16%

reported an earnings drop of nearly 50% and provided a disappointing holiday shopping forecast as it struggles with supply-chain and staffing issues. Amazon and Apple shares were both down 3.6%.

“Companies will feel the heat going forward with all input costs rising from wages, financing, and commodities including energy,” said Steen Jakobsen, chief investment officer at Saxo Bank, in a note to clients.

“However, the VIX forward curve still suggests low nervousness among equity investors over the near-term future. The 4,560 level in the S&P 500 futures is a critical pivot point for today’s trading which will determine which way we go,” Jakobsen said.

Opinion: Apple and Amazon are struggling, so investors may want to look to these tech stocks instead

Traders have been factoring in expectations for tighter Federal Reserve monetary policy as debt yield curves flatten across the globe. Many expect the Fed will announce a plan next week for tapering its $120 billion in monthly bond purchases.

Read: Why U.S. stocks keep hitting records as yield curve flattens

Markets largely brushed aside European Central Bank President Christine Lagarde’s attempt on Thursday to push back against rising market expectations for policy interest rate increases by the end of next year.

In U.S. economic data, personal income slumped 1% in September after a 0.2% gain in the prior month, while consumer spending rose 0.6%. Economists were looking for a 0.4% decline in personal income and spending came in line with expectations.

The University of Michigan’s gauge of consumer sentiment rebounded slightly to a final October reading of 71.7, up 0.3 points from the preliminary reading earlier this month, but below the final September level of 72.8.

Which companies are in focus?
How are other assets trading?
  • The yield on the 10-year Treasury note TMUBMUSD10Y was up 1.1 basis points to around 1.575%, after seeing its steepest daily drop since July 19 on Wednesday as front-end yields jumped, flattening the curve. Yields and debt prices move in opposite directions.
  • The ICE U.S. Dollar Index DXY, a measure of the currency against a basket of six major rivals, was up 0.6%.
  • Oil futures traded lower, with the U.S. benchmark CL00 down 1.3% at $81.73 a barrel as it threatened to end a stretch of nine straight weekly gains. Gold futures GC00 were down 1.4% at $1,776.80 an ounce, on track for a weekly decline of 1.1%.
  • In European equities, the Stoxx Europe 600 
    SXXP,
    -0.07%

    fell 0.2% and London’s FTSE 100 
    UKX,
    -0.26%

    slipped 0.4%.
  • The Shanghai Composite 
    SHCOMP,
    +0.82%

    rose 0.8%, while the Hang Seng Index 
    HSI,
    -0.70%

    dropped 0.6% in Hong Kong, while Japan’s Nikkei 225 
    NIK,
    +0.25%

    rose 0.2%.

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