US Stocks Sink, VIX Soars As Overheated Economy, Mixed Earnings Complicate Fed's Path: What's Driving Markets Thursday?

Wall Street experienced a significant downturn Thursday as volatility surged, triggered by a shift in risk sentiment following a combination of mixed earnings reports and stronger-than-predicted economic data, with the latter reviving concerns for an additional rate hike down the road.

The U.S. economy exhibited robust growth, expanding at an annualized rate of 4.9% in the third quarter, surpassing expectations of 4.3%. This achievement marks the strongest growth rate since the fourth quarter of 2021 and one of the most robust performances of the pre-pandemic decade.

The technology sector bore the brunt of the market decline, with tech giants falling in unison. This decline followed Alphabet Inc.’s GOOGL GOOG disappointing earnings report and Meta Platforms, Inc.‘s META warning of weaker guidance for the fourth quarter due to the ongoing conflict in the Middle East.

Market observers are now closely tracking a series of upcoming earnings reports, including Amazon.com, Inc. AMZN, set to release its quarterly results after the market closes.

Cues From Thursday’s Trading

The S&P 500 Index fell 1.3%, the Nasdaq 100 tumbled 1.9% and the Dow Jones Industrial Average 0.7%. Small caps rose 0.1%.

Thursday Trading In Major US Equity ETFs:

• The SPDR S&P 500 ETF Trust SPY was 1.1% lower to $412.79.
• The SPDR Dow Jones Industrial Average ETF DIA fell 0.7% to $328.13.
• The Invesco QQQ Trust QQQ fell 1.93% to $343.64, according to Benzinga Pro data.

Looking at S&P 500 sector ETFs:

• The Real Estate Select Sector SPDR Fund XLRE was the outperformer, up 1.9%.
• The Communication Services Select Sector SPDR Fund XLC was the weakest performer, down 2.3%, followed by the the Technology Select Sector SPDR Fund XLK, down 1.9%.

See also: Futures Vs. Options

Stocks In Focus:

• Ford Motor Company F fell 1.7% after the automaker confirmed it has reached a tentative deal with the striking United Auto Workers union. Ford will release earnings after the market close.
• Mattel, Inc. MAT fell over 7% following the toymaker’s disappointing guidance. Peer Hasbro, Inc. HAS tumbled 10%.
• O’Reilly Automotive, Inc. ORLY climbed more than 5% following its earnings report.
• Meta slid about 4.4% after the company hinted at some ad softness early in the fourth quarter due to geopolitical tensions.
• Willis Towers Watson Public Limited Company WTW rose over 11% following its earnings report.
• Align Technology Inc. ALGN fell 25% after missing both earnings and revenue estimates.
• American Tower Corp AMT rose over 8% following its upbeat earnings report.
• Altria Group, Inc. MO fell 7% amid disappointing quarterly results.
• Bristol-Myers Squibb Company BMY also fell 6%.
• Companies reporting after the close include Amazon, Arthur J. Gallagher & Co. AJG, BJ’s Restaurants, Inc. BJRI, Capital One Financial Corporation COF, Ford, Intel Corporation INTC and SkyWest, Inc. SKYW.

Commodities, Bonds, Other Global Equity Markets:

Crude oil fell 1.8%, with a barrel of WTI-grade crude trading at $83. The United States Oil Fund ETF USO fell 1.6% to $77.19.  

Treasury yields were sharply lower, with the 10-year yield down by 9 basis points to 4.86% and the 30-year yield up by 8 basis points to 5.01%. The iShares 20+ Year Treasury Bond ETF TLT was 1.1% higher for the day. 

The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.3% lower to 1.0820, after the European Central Bank left interest rate unchanged, ending a lengthy streak of hikes.

European equity indices weakened, with the broader SPDR DJ Euro STOXX 50 ETF  FEZ down 0.7%. 

Gold edged 0.4% up to $1,987/oz, while silver fell 0.4% to $22.75. Bitcoin BTC/USD was 2% lower to $33,838.

Staff writer Piero Cingari updated this report midday Thursday. 

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