Wall Street extends decline as tech earnings disappoint

15:14 26 October 2018

Summary:

  • Wall Street indices opened lower on the final trading day of the week

  • Nasdaq leads declines after some tech giants release weakish earnings report

  • No surprise in UoM data revision

It looks like Thursday’s session was just a one-day relief as equities all around the world returned to the freefall mode today. Tech shares are in the spotlight as some of the biggest companies from this sector reported their earnings over the night or ahead of the market open. As expected the University of Michigan data released earlier today did not show major deviations from the preliminary reading and thus did not spur any bigger movements on the USD market.

Start investing today or test a free demo

Open account Try demo Download mobile app Download mobile app

UoM data revision saw a minor downtick. Source: xStation5

The final University of Michigan data for October saw consumer sentiment index dropping to 98,6 pts instead of 99 pts shown in the preliminary reading. On the other hand, some pleasing revisions were spotted in terms of the inflation expectations gauges. The 1-year inflation expectations increased from 2,7% to 2,9% ( increase to 2,8% in the preliminary reading) while the 5-10-year gauge dropped from 2,5% to 2,4% (drop to 2,3% in the preliminary reading). However, as it is usually the case for UoM revisions the release did not translate into bigger price movements on the USD market or the US equity market.

The US500 bulls failed to defend the 2675 pts handle and the index extends decline today. The next area to watch is the support zone localized around the 2600 pts handle that saw some price action following the early-year rout. Do notice that with today’s drop the US500 is trading below 2018’s opening price. Source: xStation5

When it comes to the performance of the US equity indices today we can see some similarities to yesterday. Namely, the Nasdaq index is once again experiencing a move of much bigger scale than S&P 500 or Dow Jones. However, yesterday all three indices surged and Nasdaq was the outperform while today with broad declines on the US equity market the tech index is underperformer. Reasons behind the drop are unchanged - concerns over monetary tightening and impact of trade conflict on the global growth. Speaking of growth, the US GDP report released earlier today saw growth beating market expectations. At the same time the PCE inflation gauges missed forecasts. Such a combination, in theory, should boost stock market valuations but it did not. All 24 industry group subindices from the S&P 500 index trade lower today with retailers, media companies and tech shares being among the biggest laggards.

Breakdown of the S&P 500 index industry group subindices. Source: Bloomberg

Company News

Alphabet (GOOGL.US) released its third quarter earnings report yesterday after market close. Tech giant managed to beat market expectations when it comes to earnings with net profit coming in at $10.378 billion (expected $9.056 billion) and EPS at $14.75. However, the revenue data showed weaker results than market consensus suggested. Alphabet generated revenue of $27.158 billion, 0.64% below median estimate. It does not look like a big thing but it highlights a worrying feature of the current earnings. Namely, more and more companies shows better earnings results and weaker revenue figures.

When it comes to the Amazon’s (AMZN.US) earnings report the outcome is very similar to Alphabet’s. Net income reached $3.95 billion providing a beat of 38.5% over median estimate. EPS came in at $7.883 (expected $5.622). On the other hand, revenue missed the forecasts by 0.86% and came in at $56.576 billion. A better-than-expected earnings and weaker-than-expected revenue shows that growth is fueled by the tax overhaul to large extent while business does not grow in line with it.

Luckily, when it comes to Intel (INTC.US) we did not see such worrying signs as in the case of Alphabet or Amazon. Intel managed to beat expectations in all relevant measures with net income surging to $6.508 billion (expected $5.436 billion) and EPS jumping to $1.4 (expected $1.152). Unlike in the case of the two aforementioned stocks Intel also smashed revenue expectations. Market consensus point at a revenue of $18.123 billion while the company generate sales of $19.163 billion in the June-September period. Good earnings were boosted by strong growth in the PC and data-center segments.

This content has been created by XTB S.A. This service is provided by XTB S.A., with its registered office in Warsaw, at Prosta 67, 00-838 Warsaw, Poland, entered in the register of entrepreneurs of the National Court Register (Krajowy Rejestr Sądowy) conducted by District Court for the Capital City of Warsaw, XII Commercial Division of the National Court Register under KRS number 0000217580, REGON number 015803782 and Tax Identification Number (NIP) 527-24-43-955, with the fully paid up share capital in the amount of PLN 5.869.181,75. XTB S.A. conducts brokerage activities on the basis of the license granted by Polish Securities and Exchange Commission on 8th November 2005 No. DDM-M-4021-57-1/2005 and is supervised by Polish Supervision Authority.

Back

Join over 1 Million investors from around the world

We use cookies

By clicking “Accept All”, you agree to the storing of cookies on your device to enhance site navigation, analyze site usage, and assist in our marketing efforts.

This group contains cookies that are necessary for our websites to work. They take part in functionalities like language preferences, traffic distribution or keeping user session. They cannot be disabled.

Cookie name
Description
SERVERID
userBranchSymbol Expiration date 17 October 2024
adobe_unique_id Expiration date 16 October 2025
test_cookie Expiration date 1 March 2024
SESSID Expiration date 9 September 2022
__hssc Expiration date 16 October 2024
__cf_bm Expiration date 16 October 2024
intercom-id-iojaybix Expiration date 13 July 2025
intercom-session-iojaybix Expiration date 23 October 2024
xtbCookiesSettings Expiration date 16 October 2025
xtbLanguageSettings Expiration date 16 October 2025
TS5b68a4e1027
countryIsoCode
userPreviousBranchSymbol Expiration date 16 October 2025
TS5b68a4e1027
_cfuvid
intercom-device-id-iojaybix Expiration date 13 July 2025
__cfruid
__cf_bm Expiration date 16 October 2024
__cf_bm Expiration date 16 October 2024
_cfuvid
adobe_unique_id Expiration date 16 October 2025
TS5b68a4e1027
_cfuvid
xtbCookiesSettings Expiration date 16 October 2025
SERVERID
TS5b68a4e1027
__hssc Expiration date 16 October 2024
test_cookie Expiration date 1 March 2024
intercom-id-iojaybix Expiration date 13 July 2025
intercom-session-iojaybix Expiration date 23 October 2024
intercom-device-id-iojaybix Expiration date 13 July 2025
UserMatchHistory Expiration date 31 March 2024
__cf_bm Expiration date 16 October 2024
__cf_bm Expiration date 16 October 2024
__cf_bm Expiration date 16 October 2024

We use tools that let us analyze the usage of our page. Such data lets us improve the user experience of our web service.

Cookie name
Description
_gid Expiration date 9 September 2022
_gat_UA-22576382-1 Expiration date 8 September 2022
_gat_UA-121192761-1 Expiration date 8 September 2022
_ga_CBPL72L2EC Expiration date 16 October 2026
_ga Expiration date 16 October 2026
AnalyticsSyncHistory Expiration date 8 October 2022
af_id Expiration date 31 March 2025
afUserId Expiration date 1 March 2026
af_id Expiration date 1 March 2026
AF_SYNC Expiration date 8 March 2024
__hstc Expiration date 14 April 2025
__hssrc
_vwo_uuid_v2 Expiration date 17 October 2025
_ga_TC79BEJ20L Expiration date 16 October 2026
_vwo_uuid Expiration date 16 October 2025
_vwo_ds Expiration date 15 November 2024
_vwo_sn Expiration date 16 October 2024
_vis_opt_s Expiration date 24 January 2025
_vis_opt_test_cookie
_ga Expiration date 16 October 2026
_ga_CBPL72L2EC Expiration date 16 October 2026
__hstc Expiration date 14 April 2025
__hssrc
_ga_TC79BEJ20L Expiration date 16 October 2026
af_id Expiration date 31 March 2025
afUserId Expiration date 1 March 2026
af_id Expiration date 1 March 2026
AF_SYNC Expiration date 8 March 2024
_gcl_au Expiration date 14 January 2025
AnalyticsSyncHistory Expiration date 31 March 2024
_gcl_au Expiration date 14 January 2025

This group of cookies is used to show you ads of topics that you are interested in. It also lets us monitor our marketing activities, it helps to measure the performance of our ads.

Cookie name
Description
MUID Expiration date 10 November 2025
_omappvp Expiration date 28 September 2035
_omappvs Expiration date 16 October 2024
_uetsid Expiration date 17 October 2024
_uetvid Expiration date 10 November 2025
_fbp Expiration date 14 January 2025
fr Expiration date 7 December 2022
muc_ads Expiration date 16 October 2026
lang
_ttp Expiration date 10 November 2025
_tt_enable_cookie Expiration date 10 November 2025
_ttp Expiration date 10 November 2025
hubspotutk Expiration date 14 April 2025
YSC
VISITOR_INFO1_LIVE Expiration date 14 April 2025
hubspotutk Expiration date 14 April 2025
_uetsid Expiration date 17 October 2024
_uetvid Expiration date 10 November 2025
_ttp Expiration date 10 November 2025
MUID Expiration date 10 November 2025
_fbp Expiration date 14 January 2025
_tt_enable_cookie Expiration date 10 November 2025
_ttp Expiration date 10 November 2025
li_sugr Expiration date 30 May 2024
guest_id_marketing Expiration date 16 October 2026
guest_id_ads Expiration date 16 October 2026
guest_id Expiration date 16 October 2026
MSPTC Expiration date 10 November 2025
IDE Expiration date 10 November 2025
VISITOR_PRIVACY_METADATA Expiration date 14 April 2025
guest_id_marketing Expiration date 16 October 2026
guest_id_ads Expiration date 16 October 2026
guest_id Expiration date 16 October 2026
muc_ads Expiration date 16 October 2026
MSPTC Expiration date 10 November 2025
IDE Expiration date 10 November 2025

Cookies from this group store your preferences you gave while using the site, so that they will already be here when you visit the page after some time.

Cookie name
Description
personalization_id Expiration date 16 October 2026
UserMatchHistory Expiration date 8 October 2022
bcookie Expiration date 16 October 2025
lidc Expiration date 17 October 2024
lang
bscookie Expiration date 8 September 2023
li_gc Expiration date 14 April 2025
bcookie Expiration date 16 October 2025
lidc Expiration date 17 October 2024
bscookie Expiration date 1 March 2025
li_gc Expiration date 14 April 2025
personalization_id Expiration date 16 October 2026

This page uses cookies. Cookies are files stored in your browser and are used by most websites to help personalise your web experience. For more information see our Privacy Policy You can manage cookies by clicking "Settings". If you agree to our use of cookies, click "Accept all".

Change region and language
Country of residence
Language