Wall Street ends mixed at close of earnings-packed week
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[October 28, 2023] By
Stephen Culp
NEW YORK (Reuters) - U.S. stocks closed mostly lower on Friday, losing
momentum as investors digested a hectic week of mixed earnings, and
economic data that seemed to support the "higher for longer" interest
rate scenario.
The Nasdaq advanced, with tech and tech-adjacent momentum stocks led by
Amazon.com, Apple and Meta Platforms providing much of the heavy
lifting, while the S&P 500 and the Dow Jones Industrial Average lost
ground.
All three indexes notched weekly losses steeper than 2%.
The benchmark S&P 500 closed 10.28% below its July 31 closing high.
"It's hard to fight the trend in the market, and the trend has been
lower," said Ross Mayfield, investment strategy analyst at Baird in
Louisville, Kentucky. "Earnings have been fine but they're not providing
the kind of catalyst to spark a reversal to the upside."
The Commerce Department's hotly anticipated Personal Consumption
Expenditures (PCE) report showed inflation gradually cooling down as
expected, getting closer to the Federal Reserve's 2% annual target while
consumer spending, which accounts for about 70% of the U.S. economy,
posted a robust upside surprise.
"The economy would be just fine with inflation around 3%," Mayfield
added. "It's that last mile of getting where we are today to the Fed
target. It just depends how aggressively (the Fed) want(s) to pursue a
hard 2%. That's the big question."
The data did little to move the needle regarding market expectations
that the Fed will leave its key interest rate unchanged at its November
policy meeting.
Market participants are nearing the end of a busy earnings week, during
which nearly one-third of the companies in the S&P 500 posted
third-quarter results.
As of Friday, the reporting season had essentially reached the halfway
point, with 245 of the companies in the S&P 500 having reported. Of
those, 78% have delivered consensus-beating earnings.
Analysts now expect aggregate annual S&P earnings growth of 4.3%, a
sharp improvement over the 1.6% growth seen at the beginning of the
month.
"Big tech earnings were priced for perfection, and they were mostly just
'good.' That was not enough," Mayfield said. "But the broader picture is
good. This could be the building blocks for a rally to year end."
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Traders work on the floor at the New York Stock Exchange (NYSE) in
New York City, U.S., October 26, 2023. REUTERS/Brendan McDermid
Amazon.com jumped 6.8% after the e-commerce giant reported its cloud
business growth is stabilizing and predicted a revenue increase over
the holiday season.
Intel surged 9.3% following the chipmaker's consensus-beating
quarterly report, lifting the whole sector.
The Philadelphia SE Semiconductor index advanced 1.2%.
The Dow Jones Industrial Average fell 366.71 points, or 1.12%, to
32,417.59, the S&P 500 lost 19.86 points, or 0.48%, at 4,117.37 and
the Nasdaq Composite added 47.41 points, or 0.38%, at 12,643.01.
Among the 11 major sectors of the S&P 500, energy suffered the
steepest percentage drop. Consumer discretionary tech and
communication services were the only gainers.
Chevron dropped 6.7% after the oil and gas company reported lower
third-quarter profit. Shares of Exxon Mobil gave up early gains,
falling 1.9% after it posted a 54% year-on-year drop in profit.
Ford Motor sank 12.2% after it withdrew its full-year forecast due
to "uncertainty" over the pending ratification of its deal with the
United Auto Workers union, and warned of continued pressure on
electric vehicles.
Declining issues outnumbered advancers on the NYSE by a 2.69-to-1
ratio; on Nasdaq, a 2.08-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 67 new lows; the Nasdaq
Composite recorded 10 new highs and 478 new lows.
Volume on U.S. exchanges was 10.55 billion shares, compared with the
10.69 billion average for the full session over the last 20 trading
days.
(Reporting by Stephen Culp; Additional reporting by Ankika Biswas,
Shashwat Chauhan and Sruthi Shankar in Bengaluru; Editing by Richard
Chang)
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