Wall Street posts mixed results following diverse earnings reports

Wall Street posted mixed results on Thursday, following diverse corporate quarterly earnings reports published this week.

The Dow Jones was the only major index that closed higher Thursday at 32,033.28, gaining 194.17 points or 0.61 percent. The S&P 500 closed at 3,807.3, losing 23.3 points or 0.61 percent, while the Nasdaq Composite concluded the trading day at 10,792.68, slipping by 178.32 points or 1.63 percent.

The industrial sector was the biggest booster to the Dow Jones. After heavy equipment producer Caterpillar Inc exceeded its projected Q3 earnings, its stocks jumped 7.7 percent on Thursday.

Meanwhile, the S&P 500 and Nasdaq were weighted down by the tech sector, particularly Meta. Major tech companies that published earnings reports this week showed lower-than-projected revenues.

Meta Platforms plunged 24.6 percent during the day following gloomy forecasts from Facebook, Microsoft Corp and Alphabet Inc. During the opening, Amazon dropped 12 percent, losing $100 billion in value. Previously, the company had projected that sales growth during the holiday season would slow down.

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Analysts have lowered their projection of the S&P 500 combined earning growth to 2.5 percent, against 4.5 percent at the beginning of this month, despite most companies within the index reporting “slightly above expectation” earnings.

Some companies within the two losing indices gained points during the trading day following their earnings reports. McDonald's Corp and Southwest Airlines Co gained 3.3 percent and 2.7 percent, respectively, after beating their Q3 estimates. Chipmaker Intel closed at five percent higher after announcing a plan to reduce operational costs by $3 billion next year and slashing its 2022 profit forecast.

U.S. stock exchanges posted a volume of 11.36 billion shares, below the average of 11.59 billion in the last 20 trading days. Ingalls & Snyder investment strategist Tim Ghriskey described the current market as “bifurcated.”

"There's lot of pressure on tech and tech-plus names, higher growth names," Ghriskey said. "On the flipside you’re seeing a lot of strength in other sectors, in particular consumer staples, energy, financials, industrials and utilities."

GDP in Q3

Q3 Gross domestic product (GDP) was at 2.6 percent, against the initial prediction of 2.3 percent. Analysts attributed the growth to the narrowing in the trade deficit but said that it would not repeat in the coming quarters.

Other factors that contributed to the growth were government and consumer spending and investment by non-residents. On the other hand, private inventories and residential fixed investment weighted down the growth.

Capital Economics economist Paul Ashworth said he was unsure the economy would sustain this growth, despite the rebound managing to offset the loss in the first half of 2022. He insisted that the high interest rates in the U.S. would negatively impact its exports and domestic demand.

“We expect the economy to enter a mild recession in the first half of next year,” Ashworth added.

Analysts have warned that the Federal Reserve will be controlling “the direction of this market” in the following months. The central bank is expected to implement another 75 basis points hike next week. Meanwhile, investors are looking for signs that the tight monetary policy the central bank has adopted since March has taken effect in the economy.