US OPEN: Bearish opening of Thursday’s session on Wall Street, Meta and Microsoft drop after earnings

• Wall Street has lower open on Thursday.
• Microsoft shares dropped over 5% after reporting Q3 revenue of $65.6B, beating expectations but forecasting slower cloud growth.
• Meta Platforms shares fell 3% after reporting strong Q3 results but raising capital expenditure guidance. 
• Robinhood shares plunged 11% after missing revenue expectations 

US equities open in the red today, with the Nasdaq 100 leading losses, down 1.3%. S&P 500 is losing 0.87% with the Russell 2000 down only 0.80%.

In Europe, most indexes are losing today. French CAC40 and Polish W20 are leading the losses with 0.96% and 1.29% loss respectively. British UK100 is 1.02% lower, while German DAX40 slips 0.64%. Spanish SPA35 and Italian ITA40 are the best performing with 0.24% loss.

Microsoft shares dropped 5% after reporting Q3 revenue of $65.6B, beating expectations but forecasting slower cloud growth. Despite the stock decline, analysts remain bullish on Microsoft's AI integration across its product suite, with particular strength in Copilot adoption among enterprise customers. Meta Platforms shares fell 2.9% after reporting strong Q3 results but raising capital expenditure guidance. Robinhood Shares plunged 11% after missing revenue expectations due to $27M in customer incentive costs. CFO Jason Warnick attributed the shortfall to analyst models not factoring in "contra revenue" from match promotions. eBay shares fell 9.4% after providing weak Q4 guidance, citing shorter holiday season and election-related consumer distraction.

Current volatility observed on Wall Street. Source: xStation 

The Nasdaq-100 index, represented by the US100 contract, is currently trading below the 78.6% Fibonacci retracement level after a failed downward breakdown attempt yesterday. To maintain upward momentum, the key resistance at 20,638 needs to be cleared. This level corresponds to the weekly close all-time-high and has acted as strong resistance in the previous week. There was already a try to break it on Tuesday, however unsuccessful and led to retracement yesterday.

For bears to gain control, they must stay below the 78.6% Fibonacci retracement level, followed by the mid-August highs at 19,917.81. These levels have provided significant support during the uptrend that began in late July. A break of these support zones could lead to a test of the 100-day and 50-day SMAs.

The RSI is showing signs of bearish divergence, with lower highs and lower lows, while the MACD is starting to widen to the downside, signaling bearish divergence. Despite this, the 50-day SMA is widening against the 100-day SMA after a bullish crossover, which still indicates underlying bullish momentum. Source: xStation 5

News:

• Microsoft (MSFT.US) shares dropped 5% after reporting Q3 revenue of $65.6B, beating expectations but forecasting slower cloud growth. CEO Satya Nadella highlighted AI's 12-point contribution to Azure growth, while Morgan Stanley noted ongoing supply constraints in GenAI-related businesses. Gaming revenue surged 43% post-Activision acquisition, though Xbox hardware sales declined 30% YoY. Despite the stock decline, analysts remain bullish on Microsoft's AI integration across its product suite, with particular strength in Copilot adoption among enterprise customers.

Q3 Earnings:

• Earnings per share: $3.30 vs $3.03 expected
• Earnings: $24.7B vs $22.3B last year
• Revenue: $65.6B vs $64.51B expected

• Meta Platforms (META.US) shares fell 2.9% after reporting strong Q3 results but raising capital expenditure guidance. CEO Mark Zuckerberg emphasized AI progress driving results, with MetaAI reaching 500M monthly users. The company raised FY2024 CAPEX guidance to $38-40B for AI infrastructure while trimming total expenses, signaling continued investment in AI capabilities. The company's Reality Labs division continued to post losses, but Zuckerberg remained committed to the metaverse vision, announcing new AI-powered glasses and expanded Llama model deployment.

Q3 Earnings:

• Earnings per share: $6.03 vs $5.25 expected
• Earnings: $15.69B vs $11.62B last year
• Revenue: $40.59B vs $40.25B expected

• Robinhood (HOOD.US) shares plunged 11.3% after missing revenue expectations due to $27M in customer incentive costs. CFO Jason Warnick attributed the shortfall to analyst models not factoring in "contra revenue" from match promotions. Trading volumes showed strong growth across all categories, with crypto volumes up 112% and options contracts surging 47%. The company's recent launch of futures trading and index options, along with its new desktop platform, signals a strategic shift toward becoming a full-service financial platform targeting more sophisticated investors.

Q3 Earnings:

• Earnings per share: Not provided in source data
• Revenue: $474M vs $480M expected
• Transaction-based revenue: $319M vs $305M last year

• eBay (EBAY.US) shares fell 9.4% after providing weak Q4 guidance, citing shorter holiday season and election-related consumer distraction. CEO Jamie Iannone noted "one-time factors" including hurricanes affecting outlook, while highlighting the company's focus on collectibles, luxury goods, and auto parts categories amid increasing competition from Amazon and Chinese retailers. The marketplace giant has intensified its AI integration efforts, rolling out new tools for personalized shopping recommendations and streamlined listing creation to combat rising competition from Temu and Shein.

Q3 Earnings:

• Earnings per share: $1.19 vs $1.18 expected
• Revenue: $2.58B vs $2.55B expected
• GMV: $18.3B vs $18.1B expected

Other news coming from individual S&P 500 index companies. Source: Bloomberg Financial LP