In a rollercoaster day on Wall Street, the stock market witnessed significant ups and downs. The Dow Jones Industrial Average took a sharp plunge, led by tech giants such as Apple, Microsoft, Tesla, and Google’s parent company, Alphabet. Meanwhile, Meta Platforms faced headwinds due to an Israel-Hamas warning, and Amazon outshone expectations with impressive earnings. Notably, Warren Buffett made a strategic move, and the market showed mixed signals. Let’s dive into the details of this eventful day in the financial world.
Dow Jones Dives as ‘Magnificent Seven’ Face Turbulence:
The Dow Jones Industrial Average witnessed a turbulent day as it plummeted by 252 points. This downturn was primarily driven by the underperformance of the so-called ‘Magnificent Seven’ stocks, including tech giants like Apple (AAPL), Microsoft (MSFT), Tesla (TSLA), and Google’s parent company, Alphabet (GOOGL). The challenges faced by these prominent companies were indicative of the broader market trends.
GDP Growth Surprises, But Fed Remains Cautious:
The US economy showed unexpected resilience as Q3 gross domestic product (GDP) grew by 4.9% year-over-year, surpassing expectations. Economists had predicted a rise to 4.2%, making this the most substantial gain since Q4 of 2021. Despite this positive economic growth, the CME FedWatch Tool suggests that the Federal Reserve will maintain steady interest rates in the upcoming policy meeting, reflecting a cautious approach.
Tech Stocks Take a Beating, Nasdaq Hit Hard:
The tech-heavy Nasdaq index experienced the most substantial blow among the major indexes, closing near session lows with a 1.8% decline. Tech companies like Align Technology (ALGN) and Whirlpool (WHR) faced challenges, with the former falling by 24.9% after missing Wall Street’s Q3 expectations. While some sectors, such as real estate and utilities, managed to weather the storm, technology and communication services struggled.
Mixed Bag for Dow Jones: IBM Impresses, Boeing Rises:
Despite the overall negative sentiment in the market, the Dow Jones industrials attempted a comeback. International Business Machines (IBM) stood out, gaining 4.9% after surpassing expectations in its Q3 results. Other companies like Verizon Communications (VZ), Boeing (BA), and Merck (MRK) also had positive sessions, showing resilience in the face of adversity.
Meta Platforms Faces Challenges Amid Israel-Hamas Warning:
Meta Platforms, previously known as Facebook, faced a challenging day. Despite beating expectations in its Q3 earnings and revenue, the company’s stock price declined by 3.7%. This decline was attributed to a warning from CFO Susan Li regarding potential softness in advertising due to the Israel-Hamas conflict. CEO Mark Zuckerberg highlighted positive developments, but market sentiment remained bearish.
The Magnificent Seven Slide: Apple, Microsoft, Tesla, Alphabet:
The turbulence wasn’t limited to Meta Platforms. The entire ‘Magnificent Seven,’ including Apple, Microsoft, Tesla, and Alphabet, faced significant setbacks. Apple’s stock price dropped by 2.5%, falling below the 200-day moving average. Microsoft and Tesla faced similar challenges, with both companies’ stock prices dropping by 3.8% and 3.1%, respectively. Alphabet experienced a 2.7% decline, compounding its weekly losses.
Amazon’s Earnings Beat Expectations:
Amazon, the remaining member of the ‘Magnificent Seven,’ released its earnings after trading hours. The company reported earnings of 94 cents per share, surpassing expectations, and revenue of $143.1 billion. While Amazon Web Services revenue fell slightly short, advertising revenue exceeded expectations. The market reacted positively, with Amazon’s stock rising nearly 2% after hours.
Warren Buffett’s Strategic Move:
Investors closely monitored the moves of renowned stock picker Warren Buffett, CEO of Berkshire Hathaway. His firm increased its stake in Occidental Petroleum (OXY) by 3.9 million shares, raising its total holdings to 228 million shares. This strategic move underlined the company’s commitment to the energy sector, with Berkshire Hathaway now holding just under 26% of OXY shares.
Mobileye Shines After Earnings:
Amid the stock market’s challenges, Mobileye Global (MBLY) stood out as a success story. The autonomous driving company saw its stock price soar by 7.2% after surpassing earnings and revenue expectations. Mobileye reported a 47% increase in earnings per share and an 18% rise in sales for the September quarter. The company also adjusted its full-year profit target, showcasing a positive outlook.
Stocks Flash Sell Signals:
Several stocks sent out warning signals as they fell below the 50-day moving average. Companies like Oceaneering International (OII), Arista Networks (ANET), and Celestica (CLS) faced significant drops, possibly indicating more selling pressure ahead. It’s crucial for investors to pay attention to these signals as they can be indicative of future market trends.
Outside Dow Jones: 3 Stocks Show Strength:
While the overall market faced challenges, some stocks showed resilience. Baker Hughes formed a flat base with a promising entry point of 37.58. EQT recaptured its 50-day moving average, aiming for a cup-with-handle entry at 44.88. Packaging Corp. of America’s relative strength line hit new highs as it built a flat base, with an ideal buy point at 158.66. These stocks demonstrated strength amid market volatility.
The stock market’s rollercoaster day reflected the complex economic landscape, with various companies experiencing highs and lows. While the ‘Magnificent Seven’ faced turbulence, including Meta Platforms, Amazon’s strong earnings provided a ray of hope. The strategic move by Warren Buffett and the success of Mobileye highlighted the diversity of market experiences. As investors navigate uncertain times, paying attention to signals and identifying resilient stocks becomes critical for making informed decisions.