By Stephen Culp
NEW YORK (Reuters) – Wall Street provided a mixed picture on Thursday, as investors juggled solid economic data and strong earnings from some blue chips with disappointing big tech results.
The Dow jumped, the Nasdaq slumped and the S&P 500 gyrated in the middle. The price-weighted blue-chip average was held aloft by industrials while the Nasdaq moved decisively lower, weighed down by weakness in market-moving tech and tech-adjacent megacaps in the wake of downbeat quarterly results and dour guidance.
The bellwether S&P 500 was last modestly lower.
“You could say it’s a tug of war with the Dow on one side, the Nasdaq other,” said Sam Stovall, chief investment strategist of CFRA Research in New York. “And the S&P the red ribbon dangling in the center.”
Facebook parent Meta Platforms plunged 23.5% after the Facebook parent followed the trend set by Microsoft Corp and Alphabet Inc by providing gloomy forward guidance.
But heavy equipment maker Caterpillar Inc reported better-than-expected quarterly profit, sending its shares jumping 8.4% and providing the most muscle to the Dow’s advance.
A third-quarter GDP reading showing the U.S. economy returned to growth in the July-Sept period, along with steady quarterly core inflation helped take the sting out of earnings.
Investors continue to scan the economic horizon for evidence that the barrage of aggressive interest rate hikes from the Federal Reserve, begun in March, are beginning to have the desired effect by cooling down the economy.
While a 75 basis point rate hike at the conclusion of its Nov. 1-2 policy meeting is all but assured, the likelihood of a smaller, 50 basis point hike in December was last at 58.9%, according to CME’s FedWatch tool.
“The prospects of a smaller than expected hike in the Fed funds rate is what triggered the most recent relief rally,” Stovall said, adding that he believes the Fed will begin reducing the size of its rate hikes in January.
At 2:08 p.m. ET, the Dow Jones Industrial Average rose 271.92 points, or 0.85%, to 32,111.03, the S&P 500 lost 13.6 points, or 0.36%, to 3,817 and the Nasdaq Composite dropped 145.34 points, or 1.32%, to 10,825.65.
Among the 11 major sectors of the S&P 500, industrials were enjoying the biggest percentage gain, with communication services, weighed by Meta, down the most.
Third quarter reporting season forges ahead at full speed, with 227 of the companies in the S&P 500 having reported. Of those, 74% have beaten consensus estimates.
But that bar has been steadily lowered. Analysts now see aggregate S&P earnings growth of 2.5%, down from 4.5% at the beginning of October.
McDonalds Corp gained 3.2% after the fast food chain beat quarterly same-store sales estimates.
Shares of Southwest Airlines Co rose 3.8% after the carrier’s quarterly profit topped consensus estimates.
Amazon.com and Apple Inc are due to report after the bell. Their shares were last down 4.1% and 3.2%, respectively.
Advancing issues outnumbered declining ones on the NYSE by a 1.94-to-1 ratio; on Nasdaq, a 1.39-to-1 ratio favored advancers.
The S&P 500 posted 23 new 52-week highs and 7 new lows; the Nasdaq Composite recorded 73 new highs and 83 new lows.
(Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman)