(Bloomberg) — A rout in chipmakers dragged down stocks, with traders also sifting through corporate results and economic data. In late hours, Meta Platforms Inc. slid while Microsoft Corp. climbed after earnings.
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A $300 billion exchange-traded fund tracking the Nasdaq 100 (QQQ) extended losses after the close of regular trading as Meta’s spending guidance failed to enthuse investors. That’s even after a sales beat. Microsoft rose as its cloud-computing business and Office software fueled stronger-than-projected quarterly revenue growth. EBay Inc. dropped after projecting holiday season sales that fell short of analysts’ estimates.
Equities struggled to gain traction Wednesday as a closely watched gauge of semiconductor companies tumbled. The rout was driven by a slide in Nvidia Corp. and underwhelming results at Advanced Micro Devices Inc. Server maker Super Micro Computer Inc. plunged 33% as Ernst & Young LLP resigned as its auditor. Alphabet Inc. jumped on better-than-expected sales.
Traders trimmed bets on policy easing after data showing the US economy expanded at a robust pace in the third quarter as household purchases accelerated ahead of the election and the federal government ramped up defense spending. A measure of underlying inflation rose 2.2%, roughly in line with the Federal Reserve’s target.
“Solid but not blistering growth fits nicely within the current economic backdrop,” said Bret Kenwell at eToro. “Too hot of a print and investors would likely question the Fed’s decision to cut rates by 50 basis points in September, while a weak print could reignite worries about a deteriorating economy.”
Kenwell says investors should cheer for strong economic data — even if that means slower-than-expected rate cuts from the Fed.
“It’s far better to have a strong economy and earnings driving stocks higher rather than hopes of easing monetary policy from the Fed,” he said.
The S&P 500 fell 0.3%. The Nasdaq 100 slid 0.8%. The Dow Jones Industrial Average lost 0.2%. Homebuilders rallied as pending home sales in the US saw their biggest gain since 2020. Visa Inc. climbed on solid results. Eli Lilly & Co. got hit after lowering its guidance amid lackluster sales of its weight-loss drug.
