US benchmark stock indexes dropped after quarterly results from Microsoft ($MSFT) and Meta Platforms ($META) disappointed investors, alongside rising government bond yields as investors weighed the Federal Reserve's preferred inflation data. The S&P 500 declined 1.4% to 5,730.5 after midday Thursday, with the Nasdaq Composite down 2.4% to 18,171.2 and the Dow Jones Industrial Average 0.7% lower at 41,853.7.
The sectors leading the declines included technology, consumer discretionary, and industrials, while utilities and energy recorded gains intraday. Microsoft reported a year-over-year increase in fiscal Q1 earnings and sales. However, its shares fell 5.1% intraday, placing it among the worst performers in both the Dow and the Nasdaq, as investors concentrated on growth in the company's flagship Azure business. Meta Platforms saw its shares drop 3.9% following the release of its Q3 results.
Quarterly results from two additional index heavyweights, Apple ($AAPL) and Amazon.com ($AMZN), are expected to be announced after the bell on Thursday. In terms of economic indicators, the PCE price index rose by 0.2%, as anticipated, reducing the year-over-year rate from 2.3% in August to 2.1%. The price index recorded a 0.1% increase month-over-month in August.
Additionally, the core PCE price index rose as expected by 0.3% compared to a 0.2% gain in August, maintaining the year-over-year rate at 2.7%. While inflation is showing signs of improvement and is approaching the Fed's desired level of 2%, underlying measures such as the core have slowed the overall rate of improvement.
Lindsey Piegza, Chief Economist at Stifel, commented, "While the progress thus far has been welcome and warrants a less firm pace of policy, the [Federal Open Market] Committee should not lose focus as a return to price stability is not yet a foregone conclusion." The Institute for Supply Management's Chicago PMI reading fell to 41.6 in October, down from 46.6 in September, contrasting with an anticipated print of 47.0 based on a Bloomberg survey.
This index indicates a faster contraction, aligning with the readings from the Empire State, Dallas Federal Reserve, Richmond Fed, Kansas City Fed, and the S&P Global flash measures, but differing from the Philadelphia Fed's expansion signal. The national ISM manufacturing index is due Friday. Initial jobless claims in the US fell to 216,000 for the week ended Oct.
26, a decrease from an upwardly revised 228,000 level in the previous week, which was against the expectation of 230,000 as per a Bloomberg survey of analysts. The four-week moving average also decreased by 2,250 to 236,500. Most US Treasury yields increased during the day, with the two-year yield rising by 1.6 basis points to 4.17%.
The 10-year yield advanced by 2.6 basis points to 4.29%, marking its highest level since early July. In the commodities market, West Texas Intermediate crude oil climbed 0.6% to $69.05 a barrel. Conversely, gold prices fell by 1.8% to $2,750.11 an ounce, while silver sank 4% to $32.72 an ounce..