4:21pm: Nasdaq takes another big hit
The Dow closed Thursday down 252 points, 0.8%, at 32,784, the Nasdaq Composite lost 226 points, 1.8%, to 12,596 and the S&P 500 declined 50 points, 1.2%, to 4,137. The small-cap Russell 2000 added 6 points, 0.3%, to 1,657.
On the heels of a 2.4% drop on Wednesday, Thursday's result pushed the Nasdaq into a correction for the year, aka 10% below its highest close of the year in July.
“Wall Street hasn’t been impressed with big-tech earnings so far and the remaining ones, Amazon and Apple will likely struggle given the weakening outlook for the US economy,” said Ed Moya, senior market analyst at Oanda. “Strong demand from today’s seven-year auction shows you investors are still concerned with all the geopolitical risks that remain on the table.”
12:00pm: Economic growth expected to fall back in fourth quarter
The sell-off in equities continued amid signs of continued economic strength in the US as GDP grew more than expected in the third quarter.
At midday, the Dow Jones Industrial Average was down 93.56 points, 0.3% at 32,942.37, the S&P 500 was down 27.88 points, 0.7%, at 4,158.89 and the Nasdaq Composite was down 152.12 points, 1.2%, at 12,669.11.
Strong consumer spending was the main driver of a 4.9% annualised increase in gross domestic product, according to preliminary figures from the commerce department’s Bureau of Economic Analysis.
However, economists expect a pull-back in the fourth quarter.
ING Economics said that the "headwinds facing the economy and the household sector in particular are intensifying and we look for the pace of growth to slow to 1.5% in the final three months of the year."
It pointed out the "cumulative effects of Federal Reserve interest rate increases and reduced credit availability are showing signs of finally biting."
9:40pm: Stocks open lower despite strong GDP figures
US stocks opened lower, despite strong economic growth figures, as disappointing Big Tech earnings continued to cast a shadow over the equity market.
Shortly after the opening bell, the Dow Jones Industrial Average fell 25.26 points, 0.1%, at 33,010.67, the S&P 500 eased 8.71 points, 0.2%, at 4,178.06 and the Nasdaq Composite fell 41.74 points, 0.3%, at 12,779.48.
Meta opened 3.5% lower, the latest tech giant, to disappoint the market despite reporting better than expected revenue and earnings, while Alphabet fell a further 1.9%, after dropping 9.5% on Wednesday.
But there was better news on the economy which picked up markedly in the third-quarter, posting the sharpest growth in almost two years, according to figures from the Bureau of Economic Analysis.
Quarter-on-quarter gross domestic product in the US grew 4.9% on an annualised basis in the three months to September 30, compared to 2.1% in the second quarter.
The figure was above the market consensus of 4.2% and was the biggest quarter-on-quarter GDP rise since a 7.0% increase in the fourth-quarter of 2021.
"The increase in real GDP reflected increases in consumer spending, private inventory investment, exports, state and local government spending, federal government spending, and residential fixed investment that were partly offset by a decrease in non-residential fixed investment. Imports,which are a subtraction in the calculation of GDP, increased," the BEA said.
In other data, new orders for long-lasting goods in the US increased by the most since July 2020 in September, driven by a rise in spending on aircraft as underlying measures of demand remained flat.
Durable goods orders, which include washing machines, cars and aircraft, increased 4.7% in September from August, according to the Census Bureau.
It follows a 0.1% decline in August and was well ahead of economists’ expectations of 1.7%.
Another earnings deluge is keeping investors busy with Bristol-Myers Squibb down 2.9% after the company reported a decline in sales of its popular blood cancer drug Revlimid.
7:00am: No respite for stocks with further falls expected
US stocks are expected to open lower as earnings from leading tech names fail to inspire investors.
In pre-market trading, futures for the Dow Jones Industrial Average were 0.3% lower, while those for the S&P 500 were down 0.6%, and contracts for the Nasdaq 100 futures fell 1.0%.
Facebook-parent Meta beat on top and bottom lines in the third quarter, but the company’s Reality Labs division lost $3.7 billion.
The company also warned of continued macroeconomic uncertainty and lower advertising demand in the current quarter.
Shares are 2.8% lower in pre-market trading while Alphabet looks likely to extend yesterday’s 9.5% drop, down a further 1.8% ahead of the opening bell.
Results today are due from Merck, Bristol Myers Squibb, UPS, Northrop Grumman (NYSE:NOC) (Northrop Grumman (NYSE:NOC)), Honeywell (NYSE:HON) (Honeywell (NYSE:HON)), Altria, Hershey, Mastercard and Royal Caribbean, amongst others.
Amazon, Intel, Chipotle and Ford report after the market closes.
Aside from company news, the US will release its preliminary estimate for third-quarter gross domestic product, with economists expecting the world’s largest economy to have expanded by 4.3%, accelerating from the previous quarter’s 2.1%.
New orders for durable goods, those lasting more than one year, are forecast to have risen by 1.7% in September, up from a 0.1% August increase.
Initial US jobless claims, a proxy for lay-offs, are projected to have increased by 10,000 to 208,000 last week.