US stocks plunge on weak tech company earnings
Stocks continued a week of see-saw trading Friday as falling shares of major tech companies offset optimism over a strong third-quarter GDP report. The selling was led by large-cap tech companies, including Amazon and Google, both of which posted mixed quarterly results.
The Dow Jones Industrial Average fell 296 points, or 1.19 percent, though stocks pared much of their losses from earlier in the session. At its intraday low, the blue-chip index was down 539 points. The broader S&P 500, which briefly dipped into correction territory, declined about 1.7 percent. The tech-heavy Nasdaq Composite slid 2.06 percent.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| I:DJI | DOW JONES AVERAGES | 43870.35 | +461.88 | +1.06% |
| SP500 | S&P 500 | 5948.71 | +31.60 | +0.53% |
| I:COMP | NASDAQ COMPOSITE INDEX | 18972.420086 | +6.28 | +0.03% |
Earnings overshadowed a strong read on the U.S. economy, which grew a robust 3.5 percent from July through September as consumer spending and government spending extended the nation's economic growth, the Bureau of Economic Analysis said Friday. The third-quarter report follows the 4.2 percent growth in the second quarter and is the last major window into the U.S. economy before the midterm elections.
Worries about a slowdown in corporate sales, and that companies have reached peak earnings growth, have been weighing on the markets for a couple of weeks and are behind Friday's selloff in stocks.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| AMZN | AMAZON.COM INC. | 198.38 | -4.50 | -2.22% |
| GOOGL | ALPHABET INC. | 167.63 | -8.35 | -4.74% |
| FB | NO DATA AVAILABLE | - | - | - |
Third-quarter earnings season is almost half over, and so far 57 percent of the companies in the S&P 500 have beaten their revenue forecasts. That’s a sharp decline from this point in second-quarter earnings season, just three months ago, when 72 percent of S&P 500 firms had topped revenue estimates.
The GDP report showed that consumer spending led the charge, jumping 4 percent last quarter, the fastest annual growth in almost four years. On the downside, spending by businesses on plant and equipment was the weakest since the fourth quarter of 2016, which added to concerns about slowing growth.
Friday continues what has been a volatile week. On Thursday, stocks rebounded, with the Dow rising more than 400 points, as investors celebrated a series of strong results from tech giants including Microsoft and Twitter, as well as auto makers Ford and Tesla.
The CBOE Volatility Index, known as Wall Street’s “fear gauge,” was up more than 3 percent Friday. In the midst of heavier selling early Friday, the VIX surged 19 percent.