Overnight – MAG7 earnings beat, but share prices retreat
Stocks closed sharply lower Thursday as Meta and Microsoft fueled a rout in tech, while hotter inflation muddied the path for deeper Federal Reserve rate cuts.
Meta Platforms slumped more than 4% after it racked up fewer than expected users in Q3 and detailed plans to boost spending offsetting better-than-expected earnings and revenue. Uncertainty related to 2025 investment growth will likely limit near-term margin expectations despite the company’s 3Q beat.
Microsoft meanwhile, fell nearly 6% as the tech giant’s weaker guidance overshadowed fiscal Q1 results that topped estimates. Analysts, however, were quick to downplay the weaker guidance, saying it was “conservative.” And “While investors may be hung up on the optics of decelerating Azure growth paired with substantial CapEx, we see a path to upward revisions, and would be a buyer on weakness
Data released earlier showed that an inflation metric closely monitored by the Federal Reserve slowed to a 2.1% annual increase during the month, cooling from an upwardly-revised reading of 2.3% in August. Meanwhile, the so-called “core” metric, which strips out more volatile items like food and fuel, came in at 2.7% annually — faster than expectations of 2.6% and equalling August’s pace. Separately on Thursday, weekly claims for first-time unemployment benefits dipped to 216,000 from 228,000 in the prior week. The figures come as Fed officials contemplate their next policy decision after they moved to cut borrowing costs by an outsized 50 basis points in September. Friday sees the release of the latest nonfarm payrolls data, which could provide further guidance for the Fed officials as they meet next week.
Apple and Amazon reported after the bell, both beating expectations, however Apple remained down over 2% for the day. Amazon on the other hand rallied 4% on strong AWS
Stock specific
- eBay – fell 8% after the ecommerce firm reported disappointing guidance for the crucial holiday shopping season.
- Robinhood – slumped 16% after the trading platform reported that its third-quarter earnings missed expectations, although crypto trading volume and revenue doubled year-on-year.
- Uber Technologies – fell 9% after the ride-hailing firm’s gross bookings grew at its slowest pace in over a year, even as it edged past quarterly profit estimates.
- Estee Lauder – stock slumped 21% after the cosmetics giant reported a revenue miss and withdrew its fiscal 2025 outlook amid ongoing challenges in China and travel retail.
ASX SPI 8118 (-0.63%)
The ASX is in for a very rough day, with no place to hide as the US market had its worst day in quite some time and commodities, precious metals and energy all fell.
A negative payrolls number tonight could trigger a significant fall and we are on high alert for a belated Sept/Oct correction
