US stock prices retreated on Thursday, with investors reassessing big tech’s massive AI spending spree as they digested high-profile earnings, crucial inflation data and the US Federal Reserve’s policy decision.
asserted
they → retreat → earnings
All three major US stock indexes were in negative territory, with the Nasdaq dragged sharply lower by tech and tech-related megacaps in the wake of Alphabet’s disappointing quarterly results released late Wednesday.
asserted
Nasdaq → drag → results
In contrast, the smallcap Russell 2000 advanced 0.8 per cent.
asserted
Russell → advance → contrast
Semiconductor stocks were poised to snap their four-day winning streak, dropping 2.0pc as investors sought to distinguish between companies that can fund their lofty AI ambitions from those that burn through cash and borrow funds to realise their ambitions.
asserted
that → poise → ambitions
Alphabet was in the latter camp following its quarterly report released late on Wednesday.
asserted
Alphabet → follow → Wednesday
The Google parent’s revenue miss was compounded by its accelerated AI-related cash burn.
asserted
miss → compound → burn
Its shares slid 13.2pc.
asserted
shares → slide → ?
“A risk-off day like this, with small caps outperforming, is a good sign that thus far the market’s interpretation of cracks in the AI story doesn’t mean cracks in every corner of the market,” said Ross Mayfield, investment strategy analyst at Baird in Louisville, Kentucky.
asserted
Mayfield → outperform → Louisville
“There’s plenty of other places to go with your money outside of the AI trade that have pretty decent prospects.”
asserted
that → ’ → prospects
On Wednesday, Federal Reserve policymakers chose to hold US rates steady, acknowledging that while price pressures remain “elevated”, the central bank will decide on its next move as it “accumulates more information”.
asserted
it → choose → information
A raft of economic data released on Thursday answered that call, with a first take on third-quarter GDP that showed the US economy grew at a faster-than-expected pace in the third quarter, while price growth continued to gain heat with a war-related oil supply crunch feeding into broader, systemic inflation.
asserted
crunch → release → inflation
The Dow Jones Industrial Average fell 315.36 points, or 0.59pc, to 52,163.07, the S&P 500 lost 48.73 points, or 0.63pc, to 7,695.25 and the Nasdaq Composite lost 441.15 points, or 1.66pc, to 26,108.35.
Among the 11 major sectors in the S&P 500, communication services and tech were down the most, while healthcare led the gainers.
asserted
healthcare → fall → gainers
Third-quarter earnings season has crossed the halfway point, with 253 of the companies in the S&P 500 having reported.
asserted
253 → cross → S&P
Of those, 81pc have beaten analyst expectations, according to the most recent LSEG data.
uncertain
81pc → beat → data
Analysts now expect aggregate third-quarter S&P 500 earnings growth of 31.0pc, year-on-year, per LSEG.
asserted
Analysts → expect → LSEG
Caterpillar topped quarterly profit estimates but left its growth targets unchanged.
asserted
Caterpillar → top → targets
The heavy equipment maker’s shares tumbled 9.5pc.
asserted
shares → tumble → ?
Eli Lilly jumped 6.3pc after the drugmaker lifted its revenue outlook on the strength of weight-loss drug sales.
asserted
drugmaker → jump → sales
Ford gained 2.9pc following the automaker’s third-quarter revenue beat.
asserted
Ford → gain → beat
Merck beat earnings expectations on the strength of its cancer drug Keytruda and its HPV vaccine Gardasil.
asserted
Merck → beat → drug
The drugmaker’s shares advanced 4.4pc.
asserted
shares → advance → ?
Fortinet and ServiceNow dropped more than 20pc each after their quarterly results.
asserted
Fortinet → drop → results
Marvell Technology slumped 12.8pc after media reports said the company was in advanced talks to buy data-centre optics maker Lumentum Holdings.
asserted
company → slump → Holdings
Lumentum shares rose 2.0pc.
asserted
shares → rise → ?
Amazon’s shares were off 3.9pc ahead of its earnings report, expected after the closing bell.
asserted
shares → expect → bell
Advancing issues outnumbered decliners by a 1.59-to-1 ratio on the NYSE.
asserted
issues → advance → NYSE
On the Nasdaq, 2,416 stocks rose and 2,221 fell as advancing issues outnumbered decliners by a 1.09-to-1 ratio.
asserted
issues → rise → ratio
The S&P 500 posted 19 new 52-week highs and six new lows, while the Nasdaq Composite recorded 81 new highs and 131 new lows.
asserted
Composite → post → highs
The Aporia
