U.S. Markets Fall as Tech Giants Drag Down S&P 500

Markets Fall as Tech Giants Drag Wall Street Lower

U.S. stock indexes closed lower on Thursday. The S&P 500 fell 0.99%, the Nasdaq 100 dropped 1.47%, and the Dow Jones slipped 0.23%. The broader market came under pressure after disappointing earnings from major tech firms — Meta plunged over 11%, Microsoft lost more than 2%, while Alphabet rose 2% after beating estimates.

Fed and Bond Yields Pressure Markets

The market continues to digest Fed Chair Jerome Powell’s remarks that a December rate cut is “not guaranteed.” The 10-year Treasury yield rose to 4.11%, the highest in two and a half weeks. Futures now price a 72% chance of a 25 bp rate cut in December and a total of 82 bp in cuts by the end of 2026, bringing the effective federal funds rate down to 3.06%.

U.S.–China Trade Truce Extension

Stocks found some support after Presidents Trump and Xi agreed to extend the tariff truce, roll back export restrictions, and cut fentanyl-related tariffs to 10% from 20%. In return, China will resume purchases of U.S. agricultural goods and ease restrictions on rare earth magnet exports.

Earnings Season in Full Swing

This week, 173 S&P 500 companies are reporting results. After the close, investors awaited earnings from Apple and Amazon. So far, 84% of companies have beaten expectations — the strongest quarter since 2021. However, earnings are expected to rise only 7.2% y/y, the slowest growth in two years.

Government Shutdown Weighs on Sentiment

The U.S. government shutdown entered its fifth week, delaying key economic data releases. Over 640,000 federal employees have been furloughed, which could push the unemployment rate up to 4.7%.

Europe and Asia Mixed

European markets closed mixed: the Euro Stoxx 50 fell 0.12%, Japan’s Nikkei 225 hit another record high (+0.04%), and China’s Shanghai Composite dropped 0.73% from a 10-year high.

Bonds and Europe’s Economic Outlook

European yields rose: the 10-year German bund reached 2.64%, and the UK gilt climbed to 4.42%. Eurozone Q3 GDP grew 0.2% q/q, and the sentiment index hit a 2.5-year high at 96.8. The ECB held its deposit rate steady at 2.00%, citing improved global trade and geopolitical stability.

Biggest Movers

Tech stocks led losses.

Meta (-11%) — raised its full-year expense forecast to $118B.

Tesla (-4%), Amazon (-3%), Microsoft and Nvidia (-2%) also declined.

FMC Corp plunged 45% after cutting its earnings outlook, Chipotle fell 18% on lower sales forecasts, and Cigna and eBay dropped 17% and 15%, respectively.

Winners included Alphabet (+3%), Guardant Health (+28%), Metsera (+23%) after a $6.5B offer from Novo Nordisk, C.H. Robinson (+19%) on strong earnings and a $2B buyback, and Eli Lilly (+4%) after raising its revenue guidance.

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