Microsoft Corp. logo on Friday, October 25, 2024, in New York, USA.
Gina Moon | Bloomberg | Getty Images
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Price rises in line with expectations
USA Personal consumption expenditures index grew 0.2% The U.S. Commerce Department reported monthly and seasonally adjusted data for September. The 12-month inflation rate was 2.1%. Both numbers were in line with Dow Jones forecasts. Core inflation, which excludes food and energy prices, was 2.7%.
Big tech weighs on market
major U.S. indexes Thursday’s plungehit hard by declines in big tech stocks. All three indexes fell this month. European Stoke 600 The index fell 1.2% to end October down 3.4%, marking its Worst monthly performance Within one year. respectively, Inflation in the Eurozone It rose to 2% in October, exceeding expectations.
Apple and Amazon beat expectations
Apple’s fiscal Fourth quarter earnings and revenue Exceeded LSEG’s consensus expectations. The Cupertino-based company’s iPhone revenue grew 6%. at the same time, Amazon It also exceeded Wall Street’s expectations. Third quarter earnings and revenue. Although the company’s cloud division missed revenue expectations, it grew faster than the same period last year.
New contracts for Boeing employees
boeing company and its machinists union Reach a new contract quote That could end a seven-week strike involving more than 32,000 mechanics. The new proposal increases salary increases and provides the option of approving bonuses. The vote is scheduled for Monday, with the union urging its members to ratify the contract.
(PRO) Lowest cash levels among mutual funds
The U.S. presidential election is less than a week away. Often, this uncertainty signals market volatility. but Mutual fund cash levels at rock bottom Bank of America said this shows fund managers are not afraid to put cash into the market. CNBC Pro’s Jesse Pond explains what this means for the market.
bottom line
Ironically, expectations for big tech companies are so high that exceeding expectations is no longer enough for them.
take Microsoftone. company Easily beat Wall Street expectations – Quarterly revenue was $1 billion higher than expected, with net profit up 11% from the same period last year – but its shares fell 6.1% on Thursday. Conservative forecast for the quarter ending in December disappointed investorsand brought Microsoft its worst day since October 26, 2022.
This picture is similar to the one shared Yuan and apple. even letter The stock rose nearly 3% after reporting earnings on Wednesday, after falling 1.9% on Thursday.
“I think we’ve reached a point where there’s not enough enthusiasm and potential for AI,” said Ross Mayfield, investment strategist at Baird Private Wealth Management. “These companies… haven’t quite realized the growth they’re pricing in.”
Losses at these big tech companies weigh heavily on the stock market Nasdaq Indexdown 2.76%. this S&P 500 Indexwhich has a heavy weight on large companies, fell 1.86%. Both indexes had their worst day since September 3. Dow Jones Industrial Average down 0.9%. All indexes posted losses in October.
Still, some analysts remain optimistic about Big Tech’s role as a catalyst for stock market growth.
“Continued growth in AI-related capital expenditures reported by the three major tech giants supports positive structural trends,” said Solita Marcelli. UBS The Chief Information Officer of Global Wealth Management Americas wrote in the report. Maselli was referring to Microsoft, Alphabet and Meta.
Likewise, Piper Sandler Chief market technician Craig Johnson said in a letter to clients that “the overall technical evidence remains constructive with the primary trend higher across the major averages” even if there is “a near-term pullback or modest profit taking.” .
This is the huge burden that big tech companies bear. Investors and analysts don’t just expect these companies to beat expectations. They also expect large companies to drive markets that depend more on growth prospects than profits.
In essence, Big Tech, more than any other industry, needs to meet both past and future expectations.
—CNBC’s Jordan Novet, Jesse Pound, Alex Harring, Hakyung Kim and Brian Evans contributed to this report.
