The markets closed lower on Wednesday as investors digested corporate earnings and economic data that pointed to a mixed outlook. The S&P 500 fell for a second consecutive session, slipping 0.33% amid cautious sentiment around upcoming Big Tech results and signs of a moderating economy. While companies like Alphabet delivered strong earnings, boosted by impressive cloud revenue growth, others like Meta disappointed with weaker-than-expected user numbers. Additionally, slower-than-expected GDP growth and resilient payroll data added complexity to the economic picture, leaving investors uncertain about the Federal Reserve’s next moves and the direction of the broader market.

Key Takeaways:

  • S&P 500 Sees Loss Amid Economic Growth Concerns: The S&P 500 dropped 0.33% to close at 5,813.67, extending its losing streak as investors braced for further Big Tech earnings. Concerns over economic growth and mixed corporate earnings have heightened market caution.
  • Dow Falls Over 90 Points: The Dow Jones Industrial Average lost 91.51 points, or 0.22%, closing at 42,141.54. Chipmaker AMD’s more than 10% decline, alongside a broader sell-off in the semiconductor sector, contributed to the index’s pullback.
  • Nasdaq Drops Amid Mixed Tech Earnings: The Nasdaq Composite slid 0.56% to close at 18,607.93, despite reaching a new record high earlier in the day. Alphabet led gains with a nearly 3% rise on robust cloud revenue, but Meta’s 2% dip following a user growth miss weighed on the index, reflecting a mixed picture for tech stocks.
  • Mixed Economic Data Complicates Market Outlook: US GDP grew at an annualised rate of 2.8% in the third quarter, falling short of the 3.1% forecast, signalling slower-than-expected growth. However, private payrolls in October saw a strong increase, with the ADP report showing 233,000 new jobs, surpassing the expected 113,000. This mixed data reflects a resilient labour market alongside a moderating economy, adding complexity to the outlook for Federal Reserve policy.
  • 10-Year and 2-Year Treasury Yields Hover Near Highs Amid Mixed Economic Data: The yield on the 10-year Treasury note held near recent highs, slipping just 1 basis point to 4.26%, as investors processed a fresh batch of mixed economic indicators. The 2-year Treasury yield, more sensitive to short-term interest rate expectations, rose by nearly 4 basis points to 4.154%. 
  • European Markets Decline on Tech Weakness and UK Budget: The pan-European Stoxx 600 closed down 1.2%, led by a 2.4% drop in technology stocks. The FTSE 100 Index slipped 0.73% to 8,159.63 as UK banks gained following Finance Minister Rachel Reeves’s announcement of a new budget. The budget includes a tax increase of £40 billion, signalling a more cautious economic stance. Meanwhile, the DAX fell 1.08%, losing 211 points, while the CAC 40 dropped 1.14%, or 85 points, impacted by the UK’s budget news and European tech weakness. European markets also reflected stronger-than-expected eurozone GDP growth of 0.4% in the third quarter and a year-over-year inflation increase of 2.4% in Germany.
  • Asia-Pacific Markets Mostly Lower Amid Inflation and Stimulus Speculation: Australia’s S&P/ASX 200 declined 0.83% to 8,180.4 following a rise in quarterly inflation to 2.8%. Hong Kong’s Hang Seng Index fell 1.65% to 20,358, while China’s CSI 300 slipped 0.90% to 3,889.45 amid reports of a potential $1.4 trillion stimulus package to boost China’s economy. South Korea’s Kospi dropped 0.92% to 2,593.79. Japan’s Nikkei 225 rose 0.96% to 39,277.39, as optimism around earnings lifted market sentiment.
  • Oil Prices Rally on Inventory Declines and OPEC Uncertainty: Brent crude futures rose $1.94, or 2.73%, to settle at $73.06 per barrel, while West Texas Intermediate gained $1.88, or 2.79%, closing at $69.09. US crude inventories unexpectedly dropped to a two-year low, sparking concerns over supply. Additionally, speculation that OPEC may delay a planned production increase fuelled the price surge, as the market weighed supply-demand dynamics amid broader economic uncertainty.

FX Today:

  • EUR/USD Seeks Stability Near Support After Extended Decline: EUR/USD hovers near 1.0861 as it tries to stabilise following a sustained downtrend. The pair remains below the 50-period SMA at 1.0816 and the 100-period SMA at 1.0863, capping upward momentum. Economic divergence between the Eurozone and the U.S. adds to EUR’s challenges. If EUR/USD holds support at the current level, it may test the 50-period SMA. However, a drop below 1.0800 would likely lead to further declines toward 1.0750. Support levels to watch are 1.0800 and 1.0750, with resistance at 1.0816 and 1.0863.
  • GBP/USD Attempts to Stabilise But Faces Downward Pressure: GBP/USD is trading near 1.2970, facing resistance at the 50-period SMA at 1.2985. Recent declines reflect persistent selling interest, with the pair struggling to break above the 100-period SMA around 1.3017. To reverse its bearish phase, GBP/USD would need to surpass the 50-period SMA at 1.2985, potentially setting the stage for a move toward 1.3017. On the downside, support at 1.2950 remains crucial, with further losses possibly leading to a retest of 1.2900. Key supports are at 1.2950 and 1.2900, while resistance is marked at 1.2985 and 1.3017.
  • USD/CHF Consolidates Above Support Amid Bullish Momentum: USD/CHF trades near 0.8664, maintaining its position above the 50-period SMA at 0.8661. The pair’s resilience is bolstered by the 100-period SMA at 0.8633 and the 200-period SMA at 0.8558, sustaining its upward momentum. Safe-haven demand for USD has strengthened USD/CHF, positioning it to challenge resistance levels. A break above 0.8700 would signal potential upside, with 0.8750 as the next target. Conversely, a dip below the 50-period SMA could indicate a pullback toward 0.8633. Key support levels include 0.8661 and 0.8633, with resistance at 0.8700 and 0.8750.
  • AUD/USD Remains Bearish Below Key Resistance Levels: AUD/USD is trading around 0.6577, continuing its downtrend as it stays below significant moving averages. Immediate resistance is at the 50-period SMA near 0.6629, suggesting that selling pressure may persist unless this level is reclaimed. Additional resistance from the 100-period SMA at 0.6672 and the 200-period SMA at 0.6754 reinforces the broader bearish trend. Support lies near 0.6550, and a break below could open the path toward 0.6500. A bullish reversal would require a move above the 50-period SMA at 0.6629. Key supports are 0.6550 and 0.6500, with resistances at 0.6629 and 0.6672.
  • Gold Extends Gains with Support from Safe-Haven Demand: Gold is trading around 2,785.75, maintaining its strong uptrend driven by demand for safe-haven assets. Immediate support lies at the 50-period SMA at 2,742.28, with gold consistently bouncing from this level, signalling sustained buying interest. Additional support from the 100-period SMA around 2,697.56 and the 200-period SMA near 2,663.24 reinforces the bullish structure. A move above 2,788 would confirm continued bullish momentum, with 2,800 as the next major resistance. Key supports are 2,742.28 and 2,697.56, with resistance at 2,788 and 2,800.

Market Movers:

  • Reddit Soars on Earnings Beat: Reddit shares surged approximately 42% after the company reported third-quarter earnings of $0.16 per share, surpassing analysts’ expectations of a $0.07 loss. Revenue came in at $348.4 million, exceeding the consensus estimate of $312.8 million. 
  • Super Micro Computer Plunges After Auditor Resignation: Shares of Super Micro Computer tumbled nearly 33% following the resignation of its auditor, EY, which raised concerns about board independence and accounting practices. The news spooked investors, resulting in a sharp sell-off in the stock and raising questions about the company’s financial oversight.
  • Garmin Rallies on Strong Earnings: Garmin shares climbed over 23% to a new 52-week high after the company posted third-quarter pro forma earnings of $1.99 per share on revenue of $1.59 billion, beating analysts’ expectations of $1.45 per share and $1.44 billion in revenue. Garmin also raised its full-year forecast, further boosting investor confidence.
  • Eli Lilly Drops on Weak Earnings and Guidance Cut: Eli Lilly’s stock fell more than 6% after the company reported third-quarter earnings of $1.18 per share, missing consensus estimates of $1.47. Revenue came in at $11.44 billion, below analysts’ expectations of $12.11 billion. The company also lowered its full-year earnings outlook, contributing to the decline.
  • Wingstop Plummets on Earnings Miss: Wingstop shares dropped 21.4% following third-quarter results that fell short of expectations. The restaurant chain reported earnings of $0.88 per share, below the anticipated $0.95. The weaker results and guidance for the quarter led to a sell-off in the stock.
  • Alphabet Gains on Strong Cloud Growth: Alphabet shares rose nearly 3% after the tech giant reported stronger-than-expected third-quarter earnings. The company’s cloud division saw significant growth, with revenue jumping by nearly 35% year-over-year, reinforcing optimism about Alphabet’s diversification efforts.
  • Qorvo Tumbles on Weak Guidance: Qorvo shares fell more than 27% after the company provided weaker-than-expected guidance for the current quarter, overshadowing an otherwise strong second-quarter earnings report. Following the announcement, Raymond James downgraded the stock to “market perform” from “outperform” and removed its price target.

As Wednesday’s trading session closed, investors faced mixed sentiment amid contrasting signals from corporate earnings and economic data. The S&P 500 and Dow both registered declines, weighed down by missed expectations from key companies like AMD and Eli Lilly, while the Nasdaq struggled despite gains from Alphabet’s robust cloud revenue. European markets reflected similarly, with tech stocks dragging the Stoxx 600 lower. Treasury yields hovered near recent highs, as markets looked ahead to the crucial US October jobs report, hoping for clearer guidance on the economy’s direction and the Federal Reserve’s next moves.