Stocks tumble with Meta, Microsoft; dollar dips after US data
NEW YORK :World stock indexes dropped on Thursday, with the Nasdaq ending more than 2 per cent lower after Meta Platforms and Microsoft warned of rising costs for artificial intelligence, while the dollar weakened slightly after U.S. data did little to suggest a change to Federal Reserve policy.
The earnings reports added to concerns among investors that the pay-off for heavy spending on AI may take longer than many had hoped.
Shares of Facebook owner Meta were down 4.1 per cent while Microsoft was 6 per cent lower, with both weighing on the Nasdaq and S&P 500.
"Much of the adjustment in the market is the forward expectations," said Howard Chan, chief executive officer of Kurv Investment Management in San Francisco.
But "there are a lot of reasons to think that good earnings will continue," he said. "We still hold the thesis that infrastructure around AI will still do well."
After the closing bell, shares of Amazon.com were up 4.5 per cent after it posted third-quarter profit and sales that beat Wall Street estimates, while Apple shares eased 2 per cent following its outlook.
Amazon ended the regular session down 3.3 per cent while Apple ended down 1.8 per cent.
Early on Thursday, data showed U.S. consumer spending increased slightly more than expected in September, putting the economy on a higher growth trajectory heading into the final three months of the year.
Another U.S. report showed the employment cost index (ECI), the broadest measure of labor costs, rose 0.8 per cent in the third quarter. That was the smallest gain since the second quarter of 2021 and followed an unrevised 0.9 per cent increase in the second quarter.
The dollar also came under pressure against the yen after the Bank of Japan took a less dovish tone than expected, while the euro was stronger after data showed the bloc's inflation accelerated more than expected in October, bolstering the case for caution in European Central Bank interest rate cuts.
The dollar index, which measures the greenback against a basket of currencies, fell 0.2 per cent to 103.88, with the euro last 0.04 per cent higher against the dollar at $1.0859. Against the Japanese yen, the dollar was down 0.8 per cent at 152.18 yen.
Traders see a 25 basis point cut at the Fed's Nov. 6-7 meeting as near certain, but only a 70 per cent chance of a 25 basis point reduction at both its November and December meetings, according to the CME Group's FedWatch Tool.
Friday's U.S. jobs report for October will be closely watched, as well as the U.S. presidential election on Tuesday.
Opinion polls still are putting Republican Donald Trump and Democratic Vice President Kamala Harris neck and neck.
The Dow Jones Industrial Average fell 378.08 points, or 0.90 per cent, to 41,763.46, the S&P 500 fell 108.22 points, or 1.86 per cent, to 5,705.45 and the Nasdaq Composite fell 512.78 points, or 2.76 per cent, to 18,095.15.
For the month, the S&P 500 fell 0.99 per cent, the Nasdaq declined 0.52 per cent, and the Dow fell 1.34 per cent. Both the Dow and S&P snapped a five-month streak of gains.
MSCI's gauge of stocks across the globe fell 12.64 points, or 1.50 per cent, to 832.30. The index was down 2.3 per cent for the month of October, also breaking a five-month streak of increases.
The STOXX 600 index ended 1.2 per cent lower.
U.S. Treasury yields rose after the U.S. economic data.
Benchmark 10-year yields were last up 1.8 basis points at 4.282 per cent. They reached a nearly four-month high of 4.339 per cent on Tuesday.
In cryptocurrencies, bitcoin, the world's largest cryptocurrency by market cap, was 3.2 per cent lower at $70,458, about 4 per cent shy of its record high from March.
Gold retreated after hitting a record high, while safe-haven demand helped the precious metal log its fourth straight monthly gain.
Spot gold was down 1.6 per cent at $2,740.45 per ounce, after hitting a record high of $2,790.15 earlier in the session. Prices have firmed around 4 per cent for the month.
Oil prices extended gains after settlement, rising on a report that Iran is preparing to attack Israel from Iraqi territory in the coming days.
WTI crude oil futures jumped $1.81 to $70.42 at 3:00 p.m. EDT, after settlement and Brent futures for January delivery jumped by $1.82 to $73.98. U.S. crude rose 1.33 per cent to $69.52 a barrel and Brent rose to $73.23 per barrel, up 0.94 per cent on the day.
(Additional reporting by Amanda Cooper in London; Editing by David Gregorio, Daniel Wallis and Jamie Freed)
