NEW YORK (AP) — Drops in big tech companies including Microsoft and Facebook’s parent company Meta Platforms led Wall Street lower. The S&P 500 fell 1.9% Thursday, its worst day in eight weeks. The Dow Jones Industrial Average dropped 0.9%, and the Nasdaq composite tumbled 2.8%. Both Microsoft and Meta delivered better profit than forecast for the latest quarter, but investors were expecting even more from them. Other influential Big Tech stocks also fell and were among the market’s heaviest weights, including Nvidia, Amazon and Apple. Treasury yields wavered in the bond market following some mixed reports on the economy.
THIS IS A BREAKING NEWS UPDATE. AP’s earlier story follows below.
NEW YORK (AP) — Wall Street is feeling the downside of high expectations on Thursday, as Microsoft and Meta Platforms drag U.S. stock indexes lower despite delivering strong profits for the summer.
The S&P 500 was down 1.5% in late trading and on track for its worst day in nearly eight weeks, falling further from its record set earlier this month. The Dow Jones Industrial Average was down 203 points, or 0.5%, with an hour of trading remaining. The Nasdaq composite was 2.5% lower and heading 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 5.3% as investors and analysts scrutinized for possible disappointments. Many centered on Microsoft’s estimate for upcoming growth 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. As with Microsoft, though, that wasn’t enough for the stock to rise. 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 fell 4.4%.
Both Microsoft and Meta Platforms have soared in recent years amid a frenzy around AI, and they’re entrenched among Wall Street’s most influential stocks. But such stellar performances 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 so high, and Microsoft and Meta were both among Thursday’s heaviest weights on the S&P 500.
The next two companies in the highly influential group of stocks known as the “Magnificent Seven” to deliver their latest results will be Amazon and Apple. They’re set to report after trading ends for the day, and Amazon dropped 3.5%, while Apple fell 1.3%.
Earlier this month, Tesla and Alphabet kicked off the Magnificent Seven’s reports with results that investors found impressive enough to reward with higher stock prices. The lone remaining member, Nvidia, will report its results later this earnings season, and its 4.6% drop was Thursday’s heaviest weight on the market after Microsoft.
The tumble for Big Tech on the last day of October is helping to wipe out the S&P 500’s gain for the month. The index is down 0.6% and on track for its first down month in the last six, even though it set an all-time high during the middle of it.
Such a big move might have been due following an unusually long and placid run, according to Jonathan Krinsky at BTIG. He pointed to how the S&P 500 had failed to move by 1% in either direction, without accounting for rounding, for the longest stretch in nearly three years.
Still, Thursday wasn’t a complete washout on Wall Street thanks in part to cruise ships and cigarettes.
Norwegian Cruise Line Holding steamed 7.2% higher after delivering stronger profit for the latest quarter than analysts expected. The cruise ship operator said it was seeing strong demand from customers across its brands and itineraries, and it raised its profit forecast for the full year of 2024.
Altria Group rose 8.4% for another one of the S&P 500’s bigger gains after it also beat analysts’ profit expectations. Chief Executive Billy Gifford credited resilience for its Marlboro brand, among other things, and announced a cost-cutting program.
Oil-and-gas companies also generally rose after the price of a barrel of U.S. crude gained 0.9% to recoup some of its losses for the week and for the year so far. ConocoPhillips jumped 7%, and Exxon Mobil gained 0.3%.
In the bond market, Treasury yields edged lower 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, though 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 before moving lower. The yield on the 10-year Treasury fell to 4.28% from 4.30% late Wednesday. That’s still up sharply from the roughly 3.60% level it was at in the middle of last month.
Yields have been rallying following a string of stronger-than-expected reports on the U.S. economy. Such data bolster 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 surprising resilience is also forcing traders to downgrade their expectations for how deeply the Fed will ultimately cut rates.
In stock markets abroad, indexes sank across much of Europe and Asia.
South Korea’s Kospi dropped 1.5% for one of the larger losses after North Korea test launched a new intercontinental ballistic missile designed to be able to hit the U.S. mainland in a move that was likely meant to grab America’s attention ahead of Election Day.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
