Wall Street faced a significant downturn due to increased volatility caused by a shift in risk sentiment. This shift was a result of a combination of mixed earnings reports and stronger-than-expected economic data, which raised concerns about a potential rate hike in the future.
The U.S. economy showed strong growth, expanding at an annualized rate of 4.9% in the third quarter, surpassing expectations. This growth rate is the highest since the fourth quarter of 2021 and one of the strongest performances in the decade before the pandemic.
The technology sector was hit hard by the market decline, with major tech companies all experiencing a drop. This decline followed disappointing earnings from Alphabet Inc. (NASDAQ: GOOGL) and a weaker guidance for the fourth quarter from Meta Platforms, Inc. (NASDAQ: META) due to ongoing conflicts in the Middle East.
Investors are now closely watching for upcoming earnings reports, including Amazon, Inc. (NASDAQ: AMZN), which will release its quarterly results after the market closes.
In Thursday’s trading, the S&P 500 Index fell 1.3%, the Nasdaq 100 tumbled 1.9%, and the Dow Jones Industrial Average dropped 0.7%. Small caps, on the other hand, rose by 0.1%.
Looking at major U.S. equity ETFs, the SPDR S&P 500 ETF Trust (NYSE: SPY) was down 1.1% to $412.79, the SPDR Dow Jones Industrial Average ETF (NYSE: DIA) fell 0.7% to $328.13, and the Invesco QQQ Trust (NASDAQ: QQQ) dropped 1.93% to $343.64.
Among S&P 500 sector ETFs, the Real Estate Select Sector SPDR Fund (NYSE: XLRE) performed the best, rising by 1.9%. The weakest performers were the Communication Services Select Sector SPDR Fund (NYSE: XLC) and the Technology Select Sector SPDR Fund (NYSE: XLK), both down 2.3% and 1.9%, respectively.
In terms of individual stocks, Ford Motor Company (NYSE: F) fell 1.7% after reaching a tentative deal with the United Auto Workers union and ahead of its earnings release. Mattel, Inc. (NASDAQ: MAT) dropped over 7% due to disappointing guidance, and its peer Hasbro, Inc. (NASDAQ: HAS) tumbled 10%. O’Reilly Automotive, Inc. (NASDAQ: ORLY) climbed more than 5% following its earnings report. Meta Platforms slid about 4.4% after mentioning ad softness in the fourth quarter due to geopolitical tensions. Willis Towers Watson Public Limited Company (NYSE: WTW) rose over 11% following its earnings report. Align Technology Inc. (NASDAQ: ALGN) fell 25% after missing earnings and revenue estimates. American Tower Corp (NYSE: AMT) rose over 8% after reporting upbeat earnings, while Altria Group, Inc. (NYSE: MO) fell 7% due to disappointing quarterly results. Bristol-Myers Squibb Company (NYSE: BMY) also fell 6%.
In commodity markets, crude oil fell 1.8%, with WTI-grade crude trading at $83 per barrel. The United States Oil Fund ETF (NYSE: USO) dropped 1.6% to $77.19. Treasury yields saw a significant decrease, with the 10-year yield down 9 basis points to 4.86% and the 30-year yield up 8 basis points to 5.01%. The iShares 20+ Year Treasury Bond ETF (NYSE: TLT) rose 1.1% for the day. The U.S. dollar index, tracked by the Invesco DB USD Index Bullish Fund ETF (NYSE: UUP), rose 0.2%, while the EUR/USD pair, tracked by the Invesco CurrencyShares Euro Currency Trust (NYSE: FXE), was 0.3% lower to 1.0820 after the European Central Bank left interest rates unchanged. European equity indices weakened, with the broader SPDR DJ Euro STOXX 50 ETF (NYSE: FEZ) down 0.7%. Gold edged up 0.4% to $1,987 per ounce, while silver fell 0.4% to $22.75. Bitcoin (CRYPTO: BTC) was down 2% to $33,838.
