The Dow Jones Industrial Average experienced a recovery as several prominent stocks, including Apple (AAPL), Microsoft (MSFT), Tesla (TSLA), and Google parent Alphabet (GOOGL), faced significant declines. X Meta Platforms (META) saw a sharp drop following an Israel-Hamas warning. Amazon.com (AMZN) is scheduled to release its earnings after the closing bell. Despite challenging market conditions, Baker Hughes (BKR), EQT (EQT), and Packaging Corp. Of America (PKG) showed resilience near buy points.
GDP growth in Q3 exceeded expectations, with year-over-year growth of 4.9% compared to 2.1% in the second quarter, according to Commerce Department data. Meanwhile, first-time unemployment claims rose to 210,000, slightly higher than expected. Analysts are evaluating the current economic landscape, with concerns about declining capital expenditure spending and the potential for prolonged higher interest rates. Wall Street has not been impressed with big-tech earnings, and the weakening outlook for the U.S. economy may pose challenges for Amazon and Apple. Additionally, investor demand for Treasury notes signals ongoing concerns about geopolitical risks.
The Nasdaq, with its heavy concentration of technology stocks, experienced the most significant decline among major indexes, down over 1%. Align Technology (ALGN) plummeted approximately 24% after falling short of third-quarter expectations. The S&P 500 also faced losses of nearly 1%, with Whirlpool (WHR) experiencing a 14% decline due to disappointing guidance. Real estate and materials sectors performed better, while technology and communication services struggled. Small caps outperformed, with the Russell 2000 rising 0.6%. However, growth stocks, including the Innovator IBD 50 ETF (FFTY), encountered significant declines.
The Dow Jones held up relatively well compared to other indexes, down approximately 0.1%. International Business Machines (IBM) outperformed, rising around 5% following better-than-expected third-quarter results. Boeing (BA) and Merck (MRK) also had positive sessions, with both stocks rising around 3%. Nike (NKE) experienced the most significant decline on the Dow Jones, falling nearly 3%, while Visa (V) struggled with a 2% dip.
Meta Platforms (META) saw its stock decline by more than 3%, although it rebounded from session lows. The company beat third-quarter earnings and revenue expectations but faced concerns about potential advertising softness due to the Israel-Hamas conflict. Although CEO Mark Zuckerberg highlighted positive developments, the bearish response to earnings led to a reduction in Meta stock exposure on IBD’s Leaderboard list.
In addition to Meta Platforms, the other members of the Magnificent Seven, including Apple, Microsoft, Tesla, Google parent Alphabet, and Nvidia, faced significant declines. Apple stock fell over 2% and dropped below the 200-day moving average. Microsoft stock lost ground after reaching a cup base entry and is now below the 50-day moving average. Tesla stock dipped around 2% and fell below the 200-day moving average, experiencing a 15% decline in the past month. Alphabet fell another 2% on top of the previous session’s 9.5% decline, resulting in a weekly decline of over 9%. Nvidia remained down nearly 3% and continued to consolidate below its 50-day line.
Amazon is set to release its earnings after the close, with a projected 190% increase in earnings and an 11.4% rise in revenue. Investors will closely monitor the growth of Amazon Web Services. However, recent reports from Alphabet and Microsoft suggest that AWS growth may be lower than expected. Amazon stock is currently holding above the 200-day moving average.
Mobileye Global (MBLY), an IPO stock, stood out on a challenging day for the stock market, rising nearly 9% after surpassing earnings and revenue expectations. The company aims to regain its 50-day moving average. Mobileye reported a 47% increase in EPS and an 18% rise in sales for the September quarter. For the full year, the company adjusted its revenue guidance range but increased its profit target.
Three stocks that showed strength despite the market correction are Baker Hughes, EQT, and Packaging Corp. of America. Baker Hughes is forming a flat base, EQT recaptured its 50-day moving average, and Packaging Corp. of America’s relative strength line reached new heights as it builds a flat base. These stocks present potential opportunities for investors.
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