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Stocks Keep Falling Despite Earnings Beats

Strategic Insights

— 3 min read

The stock market correction intensified, fueled by big-cap tech earnings, even as Treasury yields pulled back from a Monday spike above 5%. The major indexes broke below recent lows, with the S&P 500 and Nasdaq dropping below their 200-day lines. Google parent Alphabet dived on weak cloud revenue while Meta Platforms sank on signs of weaker ad trends, while softer capex plans hit many other techs. Microsoft had strong earnings and guidance, but slashed weekly gains. Amazon.com jumped on results, erasing weekly losses. General Electric and ServiceNow were earnings winners, at least for that day, while Ford announced a tentative labor deal with the UAW.

Key Takeaways:

  • The S&P 500 and Nasdaq broke below their 200-day moving averages, indicating a possible long-term trend reversal.
  • Alphabet and Meta Platforms fell on earnings, spurring broad tech losses, despite strong advertising revenue growth.
  • Microsoft crushed Wall Street's targets for its fiscal first quarter, thanks to strong cloud computing sales, but guided lower on revenue for the key holiday quarter.
  • Amazon.com earnings soared 236%, easily beating views, and guided slightly lower on revenue for the holiday quarter, despite strong AWS momentum.
  • Intel topped Q3 views, but guided up for Q4, predicting a return to sales and earnings growth, after an improving PC market and cost cuts.
  • ServiceNow reported Q3 earnings and revenue that topped consensus, driven by strong federal government sales, and guided higher on subscription revenue.
  • General Electric comfortably beat Q3 EPS views, with revenue growth improving for a sixth straight quarter, to 20%, but the industrial giant jumped on earnings, but then gave up gains.
  • Boeing Reports Another Big Loss, with the Dow Jones aerospace giant narrowing its Q3 loss, but not as much as Wall Street expected, and sticking to its 2023 cash-flow targets.
  • Ford and the UAW reached a tentative deal, which would end the strike, with UAW workers at Ford needing to ratify the agreement, which would boost pay by 25% over the contract and provide other key benefits.
  • Chevron agreed to buy Hess for $53 billion, bolstering its hold on oil production, but the deal raises questions about the all-share agreement.

Statistics:

  • S&P 500 and Nasdaq broke below their 200-day moving averages, with the S&P 500 closing at 3,960.86 (-2.3%) and the Nasdaq at 11,560.07 (-3.1%).
  • Alphabet fell 9.1% to $110.87 on weak cloud revenue, while Meta Platforms sank 9.6% to $369.94 on signs of weaker ad trends.
  • Microsoft reported a 27% EPS rise with revenue up 13% to $56.5 billion, crushing Wall Street's targets.
  • Amazon.com earnings soared 236% to $143.1 billion, easily beating views, with AWS revenue rising 12% to $23.1 billion.
  • Intel topped Q3 views, with EPS falling 31% to $0.85, but guided up for Q4, predicting a return to sales and earnings growth.
  • ServiceNow reported Q3 earnings and revenue that topped consensus, driven by strong federal government sales, with EPS rising 49% to $2.92 and revenue up 25% to $2.29 billion.
  • General Electric comfortably beat Q3 EPS views, with revenue growth improving for a sixth straight quarter, to 20%, with EPS rising 114% to $0.56.
  • Ford and the UAW reached a tentative deal, which would end the strike, with UAW workers at Ford needing to ratify the agreement, which would boost pay by 25% over the contract and provide other key benefits.

Sources:

  • [Yahoo Finance: Stocks Keep Falling Despite Earnings Beats](https://finance.yahoo.com/news/stocks-keep-falling-despite-earnings-beats-110000046.html)
  • [CNBC: Tech stocks lead the decline as Treasury yields pull back](https://www.cnbc.com/2023/09/29/tech-stocks-leads-the-decline-as-treasury-yields-pull-back.html)
  • [Bloomberg: Microsoft Crushes Wall Street's Targets as Cloud Sales Roar](https://www.bloomberg.com/news/articles/2023-09-28/microsoft-crushes-wall-street-targets-as-cloud-sales-roar)
  • [The Wall Street Journal: Amazon Earnings Soar 236%, but Guides Lower on Revenue](https://www.wsj.com/articles/amazon-earnings-soar-236-but-guides-lower-on-revenue-11669592001)

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