U.S. stocks closed lower in an up-and-down session Wednesday as Treasury bond yields continued to march higher following stronger-than-expected economic data and renewed inflation concerns and investors waded through a busy slate of top-tier corporate earnings.
A better-than-expected reading for private payroll growth in ADP's October employment report, as well as solid consumer spending gains and core press pressures in the Commerce Department's first assessment of third quarter GDP growth added to the inflation concern story, lifting 10-year note yields 5 basis points on the session to 4.294%.
A muted outlook from AI chipmaker Advanced Micro Devices, meanwhile, held down gains for tech heavyweights such as Nvidia and Microsoft, pulling the Nasdaq 105 points, or 0.56% lower into the close.
The S&P 500, meanwhile, finished 19 points, or 0.33% lower while the Dow fell by around 91 points.
"Hurricanes and strikes are expected to result in a softer jobs report this Friday, and so far this week, the data has been mixed—job openings fell and layoffs increased, while ADP private payrolls were the strongest in a year," Ellen Zentner, chief economic strategist for Morgan Stanley Wealth Management.
"GDP may have missed estimates slightly, but it still suggests the economy is still on solid ground," she added. "And with inflation continuing to trend lower, it isn’t overheating. Bottom line, the data supports the Fed’s rate-cutting plan."
The US economic expansion that started in April 2020 is now 54 months long.
— Charlie Bilello (@charliebilello) October 30, 2024
Does that mean a recession is imminent?
Not necessarily. The last 4 US expansions lasted a minimum of 73 months w/ the 2009-2020 expansion running for record 128 months.https://t.co/l5IYmkf6Ih pic.twitter.com/Ve83nubwNz
Updated at 12:28 PM EDT
Super slider
Super Micro Computer (SMCI) shares, which were added to the S&P 500 earlier this year, fell the most in six years Wednesday after the server-maker's auditor resigned
Super Micro had delayed filing its annual report earlier this summer as it looked into "internal controls" at the group, while Ernst & Young said that "information that has recently come to our attention which has led us to no longer be able to rely on management's and the Audit Committee's representations."
Super Micro shares were marked 31.6% lower in mid-day trading and changing hands at $33.61 each, leaving it with a year-to-date gain of around 18%.
Related: Veteran analyst delivers candid message about Super Micro stock
Updated at 10:41 AM EDT
Google boost
Stocks are finding their way into the green following an uneasy opening hour, with the S&P 500 rising 13 points, or 0.23% and the Nasdaq up 60 points, or 0.32%, thanks in part to a 6.6% leap for Google parent Alphabet.
Treasury yields, meanwhile, are holding steady following the better-than-expected ADP jobs data and some underlying inflation signals in the Commerce Department's third quarter GDP estimate.
“Over the past three quarters, the economy has consistently demonstrated a pattern of growth that meets expectations," said Steve Rick, chief economist at TruStage. "This trend is encouraging, suggesting that despite the inflationary pressures of the past year, the economy is continuing to grow and exhibits signs of strength."
"As evident in the Q3 GDP data, we expect the economy to maintain its strength as we head into the end of the year,” he added.
Related: Analysts overhaul Alphabet stock price targets as Google parent soars
Updated at 9:43 AM EDT
Opening dip
The S&P 500 was marked 6 points lower, or 0.11%, in the opening minutes of trading with the Nasdaq down around 1 point from last night's record close.
The Dow, meanwhile, fell 12 points amid a sharp pullback for Caterpillar while the mid-cap Russel 2000 slipped 2 points, or 0.01%.
"The recent move higher in treasury yields is most likely a reflection of a step up in expectation for future economic growth rather than a referendum on the election outcome," said Scott Helfstein, head of investment strategy at Global X ETFs.
"Investors should welcome higher growth. Better nominal growth can push markets higher even if that means modestly higher terminal interest rates," he added.% and the Nasdaq
S&P 500 Opening Bell Heatmap (Oct. 30, 2024)$SPY -0.13%🟥$QQQ -0.27%🟥$DJI -0.22%🟥$IWM -0.16%🟥 pic.twitter.com/u5FgFGyz1D
— Wall St Engine (@wallstengine) October 30, 2024
Updated at 8:35 AM EDT
Growth miss
The Commerce Department's first estimate of U.S. GDP growth over the third quarter came in at 2.8%, missing Wall Street's forecast of a 3.1% reading and the final reading of 3% for the three months ending in June.
Consumer spending in the quarter, however, was largely robust, rising 3.7%, with core prices pressures pegged at 2.2%, just above the consensus forecast of 2.1%
U.S. Q3 GDP grew at 2.8% (down from 3.0% in Q2), driven by consumer spending, exports, and federal spending. Inflation eased, with the PCE index up 1.5%. Personal income rose slower, saving rate dipped to 4.8%. Inventory and residential investment slowed growth. pic.twitter.com/yPPJBPwfVH
— Econoday, Inc. (@Econoday) October 30, 2024
Updated at 8:21 AM EDT
ADP surprise
U.S. employers added 233,000 new jobs in the private sector this month, payroll processing group ADP reported, a tally that smashed Wall Street forecasts of a 110,000 gain and suggests ongoing strength in the domestic labor market.
It should be noticed, however, that ADP counts striking workers who remain on company payrolls who haven't received a salary, while the Labor Department's non-farm payroll does not include them.
Stocks pared earlier gains following the data release, as Treasury yields nudged higher in the inflationary concerns from the solid, but declining pay gains, with benchmark 10-year notes rising to 4.258%.
S&P 500 futures suggest a 3 point opening bell gain, with the Nasdaq called 18 points higher.
Updated at 7:57 AM EDT
Weighty loss
Eli Lilly shares fell more than 10% in premarket trading after the drugmaker slashed its full-year profit forecast following disappointing sales for its blockbuster weight loss treatments.
Lilly said Zepbound and Mounjaro sales rose to around $4.37 billion, comprising around 38% of overall group revenues, but both tallies missed Wall Street forecasts amid what the company called ""inventory decreases in the wholesaler channel," which includes Cardinal Health and McKesson.
Eli Lilly shares, which have surged more than 50% this year, were last marked 10.4% lower in premarket trading to indicate an opening bell price of $810.00 each.
Related: Eli Lilly stock crushed as weight loss sales, profits, disappoint Wall Street
Stock Market Today
Stocks closed higher last night, with the Nasdaq scaling a fresh record peak and the S&P 500 rising around 0.16%, as stocks powered past the extended surge in Treasury bond yields thanks in part to solid gains from megacap heavyweights Nvidia (NVDA) , Apple (AAPL) and Microsoft (MSFT) .
Treasury yields, while still expressing concern for resurgent inflation and higher debt and wider deficits under both presidential candidates, pared some of their advance yesterday following a solid 7-year auction and labor-market data showing a big decline in open positions for the month of September.
Benchmark 10-year note yields were last marked at 4.228% in the overnight session, with 2-year notes pegged at 4.091%. ahead of payroll processing group ADP's October National Employment report and the first look at third-quarter GDP growth from the Commerce Department.
On Wall Street, focus is likely to remain firmly on the day's busy earnings slate, which includes drugmaker Eli Lilly (LLY) and industrial bellwether Caterpillar (CAT) prior to the start of trading, with Magnificent 7 cohorts Microsoft (MSFT) and Facebook parent Meta Platforms (META) after the closing bell.
Futures contracts tied to the S&P 500, which is now up 1.22% for the month, are priced for a modest 14 point opening bell gain with the Dow Jones Industrial Average called 25 points higher.
The Nasdaq, meanwhile, is indicated 44 points higher thanks in part to a 5.5% premarket gain for Alphabet.
Related: Alphabet stock leaps as Google parent crushes Q3 earnings
The Google parent posted stronger-than-expected third-quarter earnings last night, including a stunning 35% revenue gain for its cloud division, which justified its ongoing rise in broader AI spending.
Advanced Micro Devices (AMD) shares, however, slumped 8.5% after the AI-chip maker's fourth-quarter revenue forecast met investors' forecasts but failed to ignite new enthusiasm for the stock.
More Wall Street Analysts:
- Analysts update Meta stock price target with Q3 earnings in focus
- Analysts update outlook for Nvidia's Blackwell chips amid AI boom
- Analyst reboots Reddit stock price target ahead of earnings
In overseas markets, Europe's Stoxx 600 fell 0.8% in early Frankfurt trading to the lowest level in a month following a disappointing slate of corporate earnings that clouded some positive economic data from Germany.
Britain's FTSE 100, meanwhile, slipped 0.2% ahead of the first budget statement from a Labour government in more than 15 years later this afternoon in London. That report is expected to include major tax increases and a brake on public spending.
Overnight in Asia, the Nikkei 225 closed at a two-week high thanks in part to a weaker yen and stronger tech stocks, while the regional MSCI ex-Japan benchmark was marked 0.73% lower heading into the close of trading.
Related: Veteran fund manager sees world of pain coming for stocks
