NEW YORK (AP) 鈥 The downside of high expectations thumped Wall Street on Thursday, and Microsoft and Meta Platforms dragged U.S. stock indexes lower despite delivering strong profits for the summer.
The S&P 500 sank 1.9% for its worst day in eight weeks and fell further from set earlier this month. The Dow Jones Industrial Average dropped 378 points, or 0.9%, while the Nasdaq composite tumbled 2.8% for a second straight loss after setting its .
Microsoft reported bigger profit growth for the latest quarter than analysts expected. Its revenue also topped forecasts, but its stock nevertheless sank 6% as investors and analysts scoured for possible disappointments. Many centered on Microsoft鈥檚 estimate for upcoming growth in its Azure cloud-computing business, which fell short of some analysts鈥 expectations.
The parent company of Facebook, meanwhile, likewise served up a better-than-expected profit report. As with Microsoft, that wasn鈥檛 enough to boost its stock. Investors focused instead on Meta Platforms鈥 warning that it expects a 鈥渟ignificant acceleration鈥 in spending next year as it continues to pour money into developing artificial intelligence. It fell 4.1%.
Both Microsoft and Meta Platforms have soared in recent years amid a frenzy around AI, and they鈥檙e entrenched among Wall Street鈥檚 most influential stocks. But such stellar performances have critics saying their stock prices have simply climbed too fast, leaving them too expensive. It鈥檚 difficult to meet everyone鈥檚 expectations when they鈥檙e so high, and Microsoft and Meta were both among Thursday鈥檚 heaviest weights on the S&P 500.
Amazon and Apple also helped drag the market lower, with Amazon falling 3.4% and Apple dropping 2% before they released their profit reports after trading ended for the day. They鈥檙e the latest companies in the highly influential group of stocks known as the to do so.
Earlier this month, and kicked off the Magnificent Seven鈥檚 reports with results that investors found impressive enough to reward with higher stock prices.
The lone remaining member, , will report its results later this earnings season, and its 4.8% drop was Thursday鈥檚 heaviest weight on the market after Microsoft. Expectations are just as high for the chip company after its stock soared over 880% in the last two years.
The tumble for Big Tech on the last day of October wiped out the S&P 500鈥檚 gain for the month. The index fell 1% for its first down month in the last six, even though it set an all-time high during the middle of it.
Such a big move might have been overdue following an unusually long and placid run, according to Jonathan Krinsky at BTIG. He pointed to how the S&P 500 had failed to move by 1% in a day in either direction, without accounting for rounding, for the longest stretch in nearly three years.
Still, Thursday wasn鈥檛 a complete washout thanks in part to cruise ships and cigarettes.
Norwegian Cruise Line Holding steamed 6.3% higher after delivering stronger profit for the latest quarter than analysts expected. The cruise ship operator said it was seeing strong demand from customers across its brands and itineraries, and it raised its profit forecast for the full year of 2024.
Altria Group rose 7.8% for another one of the S&P 500鈥檚 bigger gains after beating analysts鈥 profit expectations. Chief Executive Billy Gifford credited resilience for its Marlboro brand, among other things, and announced a cost-cutting initiative.
Oil-and-gas companies also rose after the price of a barrel of U.S. crude gained 0.9% to recoup some of its losses for the week and for the year so far. ConocoPhillips jumped 6.4%.
All told, the S&P 500 fell 108.22 points to 5,705.45. The Dow dropped 378.08 to 41,736.46, and the Nasdaq composite tumbled 512.78 to 18,095.15.
In the bond market, Treasury yields edged lower following a mixed set of reports on the U.S. economy.
One report said a that the Federal Reserve likes to use slowed to 2.1% in September from 2.3%. That鈥檚 almost all the way back to the Fed鈥檚 2% target, though underlying trends after ignoring food and energy costs were a touch hotter than economists expected.
A separate report said growth in workers鈥 wages and benefits slowed during the summer. That could put less pressure on upcoming inflation. A third report, meanwhile, said benefits last week. That鈥檚 an indication that the number of layoffs remains relatively low across the country.
Treasury yields swiveled up and down several times following the reports before moving lower. The yield on the 10-year Treasury fell to 4.27% from 4.30% late Wednesday. That鈥檚 still up sharply from the roughly 3.60% level it was at in the middle of last month.
Yields have been rising following a string of stronger-than-expected reports on the U.S. economy. Such data bolster hopes that the economy can avoid a recession, particularly now that the Fed is cutting interest rates to support the job market instead of keeping them high to quash high inflation. But the surprising resilience is also forcing traders to downgrade their expectations for how deeply the Fed will ultimately cut rates.
In stock markets abroad, indexes sank across much of Europe and Asia.
South Korea鈥檚 Kospi dropped 1.5% for one of the larger losses after a new intercontinental ballistic missile designed to be able to hit the U.S. mainland in a move that was likely ahead of Election Day.
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AP Business Writers Yuri Kageyama and Matt Ott contributed
