Earnings split decision: S&P, Nasdaq fall on Meta results; Dow gains on Caterpillar, McDonald's

The major U.S. equity averages put in another mixed performance on Thursday, following up on a similar result the day before. Once again, the S&P 500 and the Nasdaq finished lower, while the Dow posted gains.

The Nasdaq finished -1.6%, the S&P 500 (SP500) closed -0.6% and the Dow (DJI) ended +0.6%.

Looking at the day’s closing numbers, the Dow Jones concluded trading at 32,033.28, an advance of 194.17 on the session. However, the S&P 500 dropped 23.30 points to end at 3,807.30 and the Nasdaq slipped 178.32 points to finish at 10,792.67.

Five of the 11 S&P sectors ended the day in the red. This was led by Communication Services, which plunged more than 4%. Consumer Discretionary and Info Tech were also weak, while Industrials and Financials showed strength.

“Today’s volatile market action and weakness among tech stocks underscores the impact of the Fed’s tightening cycle, high inflation and slowing economic growth as companies continue to struggle to protect their bottom lines,” BN Capital’s Leo Nelissen told Seeking Alpha. “While GDP growth beat estimates, the fact that consumer spending remained under pressure worries markets.”

Nelissen added: “Although markets continue to benefit from a relief rally, the real bottom won’t come until the Fed is forced to pivot. Unfortunately, that requires more economic pain.”

As on Wednesday, a mixed bag of earnings reports contributed to the uncertain session. Meta Platforms led the Nasdaq lower, as weak quarterly results sent the Facebook parent lower by almost 25%. Meanwhile, strong earnings from Caterpillar, McDonald’s, Merck and Honeywell propelled the Dow higher.

The parade of high-profile earnings continues after the close, with Amazon, Apple and Intel slated to release their latest financial figures.

Turning to the fixed income market, Treasury yields pushed lower again, as the recent rally in bonds continued. The 10-year Treasury yield (US10Y) declined 12 basis points to 3.90% and the 2-year yield (US2Y) dropped 13 basis points to 4.28%.

On the economic front, government statistics showed that U.S. GDP rose 2.6% in Q3, compared to the expected increase of 2.3%. While the data eased worries about a looming recession, signs of economic strength also raised concerns that the Federal Reserve will have to push ahead with its interest rates increases.

“Tough to say at this point that the Fed has made much headway in pushing economic growth below trend … A lot of nominal growth still needs to be removed from the economy, which will likely take higher interest rates,” Seeking Alpha contributor Mott Capital Management said.

Looking at some of the other earnings movers on the day, Shopify jumped 17% after its quarterly results. Meanwhile, Credit Suisse plummeted almost 20% after a $3.7B charge led to a massive quarterly loss.

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