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Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 26, 2023.
Brendan Mcdermid | Reuters
The Nasdaq Composite dropped deeper into correction territory on Thursday as Meta became the latest tech company to offer a forecast that didn’t quite live up to investors’ expectations.
The tech-heavy index lost 2.1%, dropping below its 200-day moving average for the first time since March. The S&P 500 dipped 1.3% while the Dow Jones Industrial Average slipped 253 points, or 0.7%. With Thursday’s loss, the S&P 500 is now off by more than 10% from its July intraday high.
Following a 2.4% decline on Wednesday, the Nasdaq Composite is now officially in correction territory, down more than 10% from its high close for the year in July.
Facebook-parent Meta beat on top and bottom lines in the third quarter, but the company noted that it was seeing some advertising softness so far this quarter. Investors also worried about cost control with the company’s Reality Labs division, which shed $3.7 billion throughout the quarter. Meta shares slid nearly 5%.
The moves follow a brutal trading session Wednesday, which was partly driven by a 9.5% decline in Google-parent Alphabet. Alphabet’s Class-A shares suffered their worst day since March 2020 on Wednesday after the company reported revenue in its Google cloud unit that came in below analyst estimates.
Nasdaq YTD
The Nasdaq on Wednesday recorded its worst day since Feb. 21. The correction since the summer is being driven by a surge in bond yields with the 10-year Treasury yield at one point this month crossing 5%. The 10-year yield slipped a bit on Thursday, but that failed to stem the selling.
The market didn’t get any help from the third-quarter gross domestic product report, which came in much stronger than expected. U.S. GDP grew at a 4.9% annualized clip from July through September, while economists polled by Dow Jones forecast 4.7%.
“It’s hard to square such sequentially good economic growth with such lack luster stock market performance,” said Jamie Cox, Managing Partner at Harris Financial Group. “There is only one clear explanation: investors think ZIRP (Zero Interest Rate Policy) is the only condition which permits the economy to grow, and that is clearly an incorrect assumption.”
Major earnings are also on the horizon, with Amazon scheduled to post results after the close.
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