US benchmark equity indexes experienced a notable decline on Thursday, influenced by a post-earnings drop in Microsoft shares and reflecting an overall downward trend for the month of October. The Nasdaq Composite saw a significant drop of 2.8%, closing at 18,095.2, while the S&P 500 retreated 1.9% to finish at 5,705.5.
The Dow Jones Industrial Average lost 0.9%, ending the day at 41,763.5. The technology sector faced the steepest decline, witnessing a 3.6% drop, indicating challenges within the industry. In contrast, only the utilities and energy sectors managed to close higher amidst the market turmoil. For the month of October, the Dow recorded a decrease of 1.3%, while the S&P 500 lost 1%.
The Nasdaq posted a smaller loss of 0.6%. In the news regarding Microsoft, shares of the tech giant fell by 6%, marking the largest decline on the Dow and one of the steepest losses on the Nasdaq. The company had announced expectations for fiscal second-quarter revenue growth for its Azure cloud-computing division ranging between 31% and 32% in constant currency.
Additionally, for the recently concluded quarter, Microsoft reported a substantial annual growth of 34% for Azure and other cloud services when adjusted for constant currencies. Similarly, Estee Lauder revealed on Thursday that it was withdrawing its fiscal 2025 guidance and significantly reducing its dividend, following first-quarter sales that fell more than anticipated due to challenges in China and Asia's travel retail sector.
As a result, the cosmetics company’s shares plummeted nearly 21%, making it the second-worst performer on the S&P 500 for the day. In contrast, Paycom Software emerged as the standout performer on the S&P 500, climbing 21% after delivering impressive third-quarter results late Wednesday. Meanwhile, Comcast announced its consideration of a potential spin-off of its cable brands to adeptly navigate the ongoing trends of cord-cutting.
Following the release of better-than-expected third-quarter results, the company’s shares increased by 3.4%, positioning it among the best performers on the Nasdaq. On the treasury front, the US 10-year yield rose by 1.2 basis points, reaching 4.28%, while the two-year rate remained relatively unchanged at 4.16%. Regarding economic figures, US consumer spending rose beyond expectations in September, with the Federal Reserve's preferred inflation indicator remaining stable annually, as indicated by recent government data. BMO Capital Markets noted, "The ongoing strength in consumer spending suggests upside risk to (fourth-quarter) growth estimates, ruling out another (50-basis-point) rate cut from the Fed next week.
However, with headline inflation nearly back to the target and employment costs moderating, a (25-basis-point) move remains firmly on the table." In the labor market, weekly applications for unemployment insurance in the US declined unexpectedly, based on government data. Furthermore, a report from Challenger Gray & Christmas revealed that US-based employers cut 55,597 jobs this month, a decrease of approximately 24% from September but an increase of 51% year-over-year. Looking ahead, Friday’s data from the Bureau of Labor Statistics is anticipated to indicate that the US economy added 101,000 jobs in October, marking a decline from the 254,000 jobs gained in the previous month, as per a Bloomberg poll. In commodity markets, West Texas Intermediate crude oil prices climbed 2.8% to $70.52 per barrel, buoyed by positive sentiment regarding US fuel demand and a surprising drop in crude and gasoline inventories, as noted by D.A.
Davidson in a client advisory. Reports suggesting that the Organization of the Petroleum Exporting Countries and its allies might delay a proposed production increase have also provided support to prices. In contrast, gold fell by 1.6% to $2,757 per troy ounce, while silver declined by 3.6% to $32.84 per ounce..