Markets
Stocks ended last week lower as disappointing third-quarter corporate earnings reports triggered a technology-led selloff that deepened on Friday. And Monday was no picnic either.
The Standard & Poor’s 500 Index slipped 0.57 percent, while the Nasdaq Composite Index declined 2.00 percent. The Dow Jones Industrial Average fell 0.85 percent. Meanwhile, the MSCI EAFE Index, which tracks developed overseas stock markets, rose 0.85 percent.¹,²
Early Enthusiasm Gives Way to a Rout
The AI trade received a fresh boost to start the week as one of the largest AI platforms filed for an initial public offering. Investors also appeared optimistic heading into one of the busiest weeks for third-quarter corporate earnings reports.
Monday’s momentum continued into Tuesday’s session, while falling oil prices over both days added to investor enthusiasm.³
By midweek, the Federal Reserve held interest rates steady, as expected, prompting mixed trading. Nevertheless, all three major averages closed modestly higher on Wednesday. Over the first three trading days of the week, the Nasdaq gained more than 2 percent, while the S&P 500 advanced more than 1.5 percent.⁴
Thursday’s session opened on a negative note following mixed third-quarter earnings results from two of the largest technology companies. Despite a stronger-than-expected gross domestic product (GDP) report and gains in seven of the 11 S&P 500 sectors, stocks remained under pressure throughout the day.⁵
On Friday, the technology-led selloff intensified as investors appeared to favor more defensive sectors heading into the end of the month. The Nasdaq declined nearly 3 percent during the session.⁶
Upbeat Third-Quarter GDP Report
The Federal Reserve’s decision last Wednesday to leave short-term interest rates unchanged was widely expected. However, two Fed officials voted to raise rates, which came as something of a surprise.⁷
Another surprise came from the Commerce Department’s initial estimate showing that the economy grew 3.4 percent in the third quarter.
That exceeded economists’ expectations of 3.1 percent growth and, more importantly, represented an acceleration from the second quarter, when GDP grew 2.2 percent.⁸
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