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 (NASDAQ:GOOGL) (NASDAQ:GOOG) disappointing earnings report and Meta Platforms, Inc.‘s (NASDAQ: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. (NASDAQ: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 (NYSE:SPY) was 1.1% lower to $412.79.
• The SPDR Dow Jones Industrial Average ETF (NYSE:DIA) fell 0.7% to $328.13.
• The Invesco QQQ Trust (NASDAQ: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 (NYSE:XLRE) was the outperformer, up 1.9%.
• The Communication Services Select Sector SPDR Fund (NYSE:XLC) was the weakest performer, down 2.3%, followed by the the Technology Select Sector SPDR Fund (NYSE:XLK), down 1.9%.

See also: Futures Vs. Options

Stocks In Focus:

• Ford Motor Company (NYSE: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. (NASDAQ:MAT) fell over 7% following the toymaker’s disappointing guidance. Peer Hasbro, Inc. (NASDAQ:HAS) tumbled 10%.
• O’Reilly Automotive, Inc. (NASDAQ: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 (NYSE:WTW) rose over 11% following its earnings report.
• Align Technology Inc. (NASDAQ:ALGN) fell 25% after missing both earnings and revenue estimates.
• American Tower Corp (NYSE:AMT) rose over 8% following its upbeat earnings report.
• Altria Group, Inc. (NYSE:MO) fell 7% amid disappointing quarterly results.
• Bristol-Myers Squibb Company (NYSE:BMY) also fell 6%.
• Companies reporting after the close include Amazon, Arthur J. Gallagher & Co. (NYSE:AJG), BJ’s Restaurants, Inc. (NASDAQ:BJRI), Capital One Financial Corporation (NYSE:COF), Ford, Intel Corporation (NASDAQ:INTC) and SkyWest, Inc. (NASDAQ: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 (NYSE: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 (NYSE: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 (NYSE:UUP) up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust (NYSE: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  (NYSE:FEZ) down 0.7%. 

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

Staff writer Piero Cingari updated this report midday Thursday. 

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