Nasdaq Index Under Pressure as Microsoft, Meta Earnings Disappoint Investors

Nasdaq Declines as Tech Giants Fall Short on Earnings and Economic Data Steadies Rate Expectations

The Nasdaq Composite extended its losses on Thursday, pressured by weaker-than-expected results from Microsoft and Meta Platforms, which overshadowed better-than-expected inflation data and a slight pullback in layoffs. As Wall Street awaits more third-quarter earnings, particularly from Amazon and Apple, traders are assessing the outlook for the Federal Reserve’s policy meeting on November 7.

Simple technical analysis says there is enough downside momentum in the market to drive the index into the 50-day moving average at 20006.71 so brace yourself for more pressure. This indicator is the short-term “make or break” level because if it fails as support, the index is likely headed for the 200-day moving average at 19329.26.

Microsoft and Meta Disappoint Despite Earnings Beats

Microsoft shares fell by 5% following the company’s release of guidance that tempered investor expectations for future revenue growth. While Microsoft posted a quarterly earnings beat, the guidance was seen as lackluster in an environment where tech valuations rely heavily on projected growth.

Meta Platforms also dropped, losing over 2% as the company’s report showed a user growth shortfall. Additionally, Meta’s announcement of significant capital expenditure increases for 2025 raised concerns about tighter margins, although it did report top- and bottom-line beats for the quarter.

Adding to the mixed performance in tech, Advanced Micro Devices (AMD) plummeted more than 10% following disappointing fourth-quarter guidance. Meanwhile, Alphabet’s stock offered some reprieve to the sector, gaining nearly 3% after reporting solid revenue growth.

Fed’s Preferred Inflation Measure Remains Stable

On the economic front, the Federal Reserve’s preferred inflation measure, the Personal Consumption Expenditures (PCE) Price Index, showed a 0.2% monthly rise in September and a 2.1% year-over-year increase, aligning with consensus estimates. Core PCE, which strips out volatile food and energy prices, rose 0.3% for the month and slightly exceeded expectations on an annual basis, hitting 2.7% against a forecasted 2.6%.

Weekly jobless claims for the week ending October 26 also came in below expectations, reaching 216,000 against the anticipated 230,000. This data suggests resilience in the labor market, adding weight to the Fed’s likely decision to maintain current rates through its upcoming meeting, despite sustained inflationary pressures.

Layoffs Climb But Remain Below Pandemic Levels

According to a report from Challenger, Gray & Christmas, planned layoffs rose by 51% in October compared to a year ago, with job cuts driven largely by the aerospace and defense sectors due to the Boeing strike. However, layoffs were down 23.7% from September levels. Year-to-date, total layoffs reached 664,839, marking the highest level since 2020 but still reflecting a fairly stable labor market outside of the pandemic era.

Market Forecast: Continued Volatility Likely as Jobs Data Awaits

With the Federal Reserve in a blackout period ahead of its November policy meeting, investors will be closely watching Friday’s nonfarm payroll report, which includes key data on job creation, unemployment, and wage growth.

Given the stable inflation figures and strength in employment, the Fed is expected to hold off on any immediate rate cuts, with the market pricing in a 96% chance of no change at the November meeting.

However, uncertainty remains as traders assess the impact of tech sector earnings and economic indicators, which may introduce further volatility in the Nasdaq and broader market indices in the near term.