Stock Market Recap: Tech Sector Leads Downturn on October 31, 2024
Major Indexes Close Lower Amid Tech Selloff
On Thursday, October 31, 2024, the U.S. stock market experienced a significant downturn, primarily driven by weakness in the technology sector. The S&P 500, a key benchmark for the overall market, closed at 5,735.81, dropping 77.86 points or 1.34%. This decline effectively wiped out the index’s gains for the month of October, ending a streak of monthly advances that would have been the longest since 2021.
The tech-heavy Nasdaq Composite bore the brunt of the selloff, plummeting 384.27 points or 2.07% to close at 18,223.66. Meanwhile, the Dow Jones Industrial Average showed more resilience but still fell 295.36 points or 0.70%, ending the session at 41,846.18.
Tech Giants Stumble on Earnings Reports
The market’s decline was largely attributed to disappointing earnings reports and guidance from major technology companies. Microsoft (MSFT) shares dropped nearly 4% after the company’s revenue guidance fell short of investor expectations. Similarly, Meta Platforms (META) saw its stock price decrease by about 3% following lower-than-anticipated user growth and warnings of increased capital expenditures for 2025.
Investors are now closely watching Apple (AAPL) and Amazon (AMZN), both scheduled to report their earnings after the market close. Their results could significantly impact market sentiment in the coming days.
Economic Data Paints Mixed Picture
Adding to market uncertainty, recent economic data presented a mixed outlook. The U.S. economy grew at an annualized rate of 2.8% in the third quarter, slightly below the consensus forecast of 3.1%. While this represents a robust growth rate, it marks a slight deceleration from the previous quarter’s 3% increase.
On a positive note, the labor market showed continued strength, with the private sector adding 233,000 jobs in October, surpassing expectations and reaching the highest level of job creation since July 2023.
Inflation Data and Fed Watch
Investors are eagerly awaiting the release of the Personal Consumption Expenditures (PCE) price index for September, the Federal Reserve’s preferred inflation gauge. Economists expect the PCE to have grown by 0.2% monthly and 2.1% annually. This data, along with Friday’s October payrolls report, will be crucial in shaping the Fed’s interest rate decision at its upcoming meeting on November 7.
Market Movers and Sector Performance
Despite the overall market decline, some stocks bucked the trend. Peloton Interactive (PTON) surged 24.65%, while Carvana (CVNA) jumped 19.43%. On the downside, Aurora Innovation (AUR) and Huntington Ingalls Industries (HII) saw significant losses of 24.62% and 22.75%, respectively.
The Technology Select Sector SPDR (XLK) was the worst-performing sector, falling 1.6%. Utilities and Health Care sectors also saw modest declines.
Looking Ahead: Market Catalysts
As we move into November, market participants will be closely monitoring several key factors:
1. Upcoming earnings reports from remaining tech giants and other major corporations
2. The Federal Reserve’s interest rate decision and commentary on November 7
3. Ongoing geopolitical developments and their potential impact on global markets
4. Consumer spending trends as we approach the holiday shopping season
Conclusion: Caution Prevails as October Ends
The stock market’s performance on October 31, 2024, serves as a reminder of the ongoing volatility and challenges facing investors. While economic growth remains robust, concerns about tech sector valuations and future earnings potential have injected a note of caution into the market. As we enter the final months of the year, investors will need to navigate carefully through a landscape of mixed economic signals and evolving corporate performance.
