Market Reaction to Tech Earnings & Economic Indicators

The stock market greeted the latest set of earnings reports from megacap technology names with varied reactions, as investors digested implications for growth and valuation. Here’s a detailed report on the earnings and economic indicators impacting the markets.

Earnings Reports Spark Market Volatility

In the after-hours trading session on Wednesday, March 20, 2024, several key technology companies released their earnings reports. Meta Platforms (META) dropped by 3% after missing expectations for user growth and warning about higher capital expenditures in 2025. Additionally, Microsoft (MSFT) suffered a near 4% drop in shares following disappointing revenue guidance.

During regular trading hours on the same day, the major indexes showed modest losses. The S&P 500 retreated by 0.3%, the Dow fell 0.2%, and the Nasdaq Composite experienced a nearly 0.6% decline. While the fall was minimal, investors remained vigilant, focusing on the disclosed financials and their implications for future performance.

Futures React as Stocks Slide Post-Earnings

Stock futures indicated the market’s initial sentiment upon opening the next day for regular trading. S&P 500 futures slid 0.3%, while Nasdaq 100 futures fell 0.5% and Dow futures dipped 27 points. These declines reflected the overnight disappointment with key technology earnings.

GDP and PCE Exceed Expectation Concerns

Investors also placed a keen eye on the third-quarter U.S. gross domestic product reading. The economy grew at an annualized rate of 2.8%, a slight drop from the anticipated 3.1%. The personal consumption expenditures price index (PCE) for September is set to report on Thursday, providing further insight into consumer spending and inflation trends.

The PCE reading, economists suggest, may influence the Federal Reserve’s interest rate decision slated for November 7. Jamie Cox, managing director at Harris Financial Group, emphasized the importance of a stable economy, stating, "Growth up, inflation down is precisely what you want to see… The Fed doesn’t need to be afraid of a stable and growing economy to normalize rates this cycle so long as disinflation persists."

Economic Data and Job Reports Ahead

A crucial week lies ahead for investors with the anticipation of jobless claims data and several key earnings reports. Tech giants, including Apple (AAPL), Amazon (AMZN), Uber (UBER), Merck (MRK), and Intel (INTC), are expected to report earnings on Thursday, providing further clarity on growth prospects and market sentiments.

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Data source: CNB.com, Reuters