Stocks fall amid tech earnings, Fed hold

(AWP Alliance News) - Stocks ended lower in New York on Thursday as investors digested a hotter US inflation reading and a raft of earnings from major technology firms, including a poorly received print from Alphabet.

The Dow Jones Industrial Average closed down 132.54 points, 0.3%, at 52,342.56. The S&P 500 fell 23.59 points, 0.3%, to 7,720.39. The Nasdaq Composite ended down 365.13 points, 1.4%, at 26,184.73.

"I think we're in a better, more stable place in October and heading into November in the tech trade than we were in August and September. But that said, I think investors are becoming much more selective," B. Riley Wealth Management chief market strategist Art Hogan told CNBC. I think we're in an environment where there's less concern and negativity over tech writ large, but I think specifically, you can certainly get announcements from individual players that will move the needle."

The Bureau of Economic Analysis on Thursday said its personal consumption expenditures price index rose 3.6% in September, accelerating from 3.4% in August and meeting the FXStreet cited forecast.

The core reading, which excludes food and energy, is the Federal Reserve's preferred inflationary measure. The core PCE price index picked up 3.1% on-year in September, quickening from 3.0% in August and also in line with the market forecast.

The release came a day after the US Federal Reserve elected to leave interest rates on hold. The European Central Bank followed suit on Thursday.

At the press conference following the announcement, Federal Reserve Chair Kevin Warsh told reporters it was the "right policy decision for this moment" and that the US central bank "will deliver price stability, no ifs, no buts".

Eric Winograd, chief US economist at AllianceBernstein said he was "struck" again by the gap between Warsh's "very strong rhetoric" about fighting inflation and the committee's decision to delay action.

Morgan Stanley expects two more 25 basis point hikes in December and March, bringing the terminal range to 4.25%-4.5%.

Meanwhile, the BEA said gross domestic product rose 3.4% quarter-on-quarter on an annualised basis in the three months to September 30, picking up speed from a 2.2% climb in the second quarter. Growth beat an FXStreet cited forecast of 3.2%.

On Wall Street, Google owner Alphabet slumped 12% after poorly received earnings.

Alphabet said net income fell to USD26.17 billion in the three months ended September 30 from USD31.23 billion the year prior. Diluted net income per share declined to USD2.12 from USD2.87, well below consensus of USD2.97.

The company reported 'other expenses' of USD8.22 billion compared with 'other income' of USD12.76 billion the year prior. This was due primarily to an unrealised loss from its investment in Space Exploration Technologies Corp from a decline in its stock price in the quarter.

Growth slowed in YouTube and Search.

SpaceX ended down 0.9%.

Meanwhile, Microsoft lost 0.6% despite accelerating growth in its key Azure cloud business as it reported a steep drop in sales of devices and Windows licenses amid higher memory and storage costs. Microsoft also cited the end of support for Windows 10 last year and weak PC demand.

In its first quarter to September 30, revenue rose 19% to USD92.28 billion from USD77.67 billion, ahead of the USD90.69 billion consensus. Adjusted EPS of USD4.89 came in stronger than the USD4.73 LSEG consensus estimate.

On Monday, the company offered buyout packages to 60,000 employees.

Chipmakers ended lower. Nvidia declined 0.8%, Broadcom fell 1.9%, and AMD lost 2.1%.

The yield on the 10-year US Treasury dropped to 4.94% from 5.02% late Wednesday. The 30-year yield was at 5.29%, down from 5.35%.

Against the dollar, the euro was at USD1.1177, up from USD1.1157 on Wednesday. Sterling rose to USD1.3380 from USD1.3329. Against the yen, the dollar was at JPY157.70 down from JPY157.91.

A barrel of Brent fetched USD115.95 late Thursday, up from USD115.01 on Wednesday. West Texas Intermediate rose to USD102.88 from USD102.49.

Gold fell to USD4,025.65 an ounce from USD4,073.81.

In Europe, the FTSE 100 closed up 0.3% in London. The CAC 40 ended up 1.1% in Paris. The DAX 40 in Frankfurt rose 1.3%.

In China, the Shanghai Composite Index ended down 0.8%. The Hang Seng fell 0.6% in Hong Kong. The Nikkei 225 in Tokyo rose 1.1%. The S&P/ASX 200 ended up 0.5% in Sydney.

Friday's corporate calendar has third quarter results from AbbVie, Chevron and Sanofi.

The global economic diary includes the US employment cost index.

By Aidan Lane, Alliance News reporter

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