Nasdaq futures experienced a decline on Thursday, suggesting a further slide into correction territory. Stocks continued to sink due to disappointing earnings reports from Big Tech companies and rising bond yields.
Contracts on the Nasdaq 100 (^NDX) dropped by almost 0.9%, indicating that tech stocks are still under pressure following their worst single-day performance in eight months on Wednesday.
Meanwhile, S&P 500 (^GSPC) futures were down by 0.5% after the benchmark recorded its lowest close since May. Dow Jones Industrial Average (^DJI) futures also slipped by 0.2%, mirroring the modest losses of the previous day.
Earnings are currently in focus for stocks, as investors respond to megacaps reporting more downbeat third-quarter results than anticipated. There are growing concerns that valuations are too high in a world of surging Treasury yields, with the benchmark 10-year yield (^TNX) nearing 5% once again on Thursday.
While Meta’s (META) earnings beat expectations on both the top and bottom lines, the initial gains in its shares were reversed after the Facebook parent cautioned that geopolitical unrest could negatively impact its ad business. The flow of earnings continues on Thursday, with Amazon (AMZN), Intel (INTC), Ford (F), and Chipotle (CMG) being the highlights on the agenda.
Overall, the results from Big Tech companies do not provide a clear narrative at a time when the stock market desperately needs one. This could mean that they won’t be sufficient to drive a rally like in previous earnings seasons.
“There is a real dispersion,” stated BlackRock’s Global CIO Rick Rieder, referring to the conflicting signs in the market, particularly around Microsoft and Alphabet earnings. “That’s why markets are so jumpy and uncertain.”
Some guidance for the market might come with the release of the third-quarter GDP reading on Thursday. As a first estimate, it is expected to represent the peak of economic growth in 2023 following a series of data showing resilience.
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KStock futures point to a return to sell-off
Wall Street stocks were on track Thursday to add to the previous day’s sharp losses as investors looked ahead to fresh earnings releases.
Futures on the Dow Jones Industrial Average (^DJI) were down by 0.41%, or 136 points, while S&P 500 (^GSPC) futures shed 0.67%. Contracts on the tech-heavy Nasdaq 100 (^NDX) were 0.95% lower.
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