Tech Stocks Declines

US stocks markets faced a decline on Thursday, driven by disappointing third-quarter results from major tech companies and elevated Treasury yields.

The Dow dipped approximately 252 points, marking a 0.8% decrease, while the S&P experienced a 1.2% drop. The Nasdaq Composite, primarily composed of tech stocks, plummeted by another 1.8%.

This decline on Thursday followed the S&P 500’s fall to its lowest levels since May the previous day, with the Nasdaq also recording its worst performance since February, closing down by 2.4%. Notably, Meta witnessed a 3.7% slide in its shares on Thursday after reporting weaker advertising revenue for the quarter. While Meta surpassed expectations and posted substantial year-over-year quarterly revenue gains of 23%, Wall Street expressed concerns about its Reality Labs division, which incurred a $3.7 billion loss.

“Tech stocks have also felt the impact of rising Treasury yields.” Source/ Internet.

Google-parent Alphabet also encountered a drop on Wednesday, declining by 9.5% following its earnings report, which beat expectations but underperformed in its cloud business. This represents the stock’s most significant decrease since March 2020, with shares falling an additional 2.7% on Thursday morning.

Other prominent tech companies, such as Apple, Amazon, and Microsoft, observed share price decreases alongside Meta and Alphabet. Apple saw a 2.5% drop, Amazon, which reported robust results on Thursday afternoon, was down by 1.5%, and Microsoft shares fell by 3.8%. Microsoft reported quarterly revenue of $56.5 billion on Tuesday, reflecting 13% year-over-year sales growth and surpassing expectations. The company’s quarterly profits reached $22.3 billion, a 27% increase compared to the same period last year. Notably, the leading tech firms in the US, including Apple, Amazon, Nvidia, Microsoft, and Alphabet, constitute one-fourth of the S&P 500’s value, significantly influencing investors’ portfolios.

The Nasdaq now finds itself in correction territory, with a decline of over 10% since its most recent high in July. Meanwhile, the S&P 500 teeters on the edge of correction territory, down by nearly 10% from its intraday high, also reached in July.

Tech stocks have been impacted by the rise in Treasury yields. The 10-year yield approached a critical 5% threshold on Thursday morning, subsequently retreating to 4.85% in the afternoon. This shift followed the release of a report indicating a remarkably strong expansion of the US economy in the third quarter, even as interest rates reached their highest level in 22 years.

The Commerce Department reported that the Gross Domestic Product (GDP), a measure of all goods and services produced in the economy, grew at an annualized rate of 4.9% in the third quarter. This surpassed the second quarter’s 2.1% growth rate and exceeded economists’ expectations of a 4.3% rate. In other economic news, mortgage rates continued to rise amid a stronger-than-anticipated economy. The 30-year fixed-rate mortgage averaged 7.79% in the week ending October 26, up from 7.63% the previous week, compared to 7.08% a year ago. Notably, pending home sales in the US increased in September, despite rising rates.