Stocks closed at record levels on Friday as investors digested disappointing earnings results from Apple (AAPL) and Amazon (AMZN) that came during a strong quarterly reporting season from several major companies.
The S&P 500 set intraday highs and closes. The index posted a monthly gain of more than 6.5% in October, or its best one-month advance since November 2020. The energy and information technology sectors outperformed consumer discretion during the month.
The Nasdaq also hit a new record high, although two heavyweight tech giants saw stocks pull back.
Amazon shares fell after the e-commerce giant missed its third-quarter forecast and forecast a jump in expenses in the fourth quarter due to supply chain disruptions and rising labor, material and shipping costs. These factors are expected to generate “several billions of dollars in additional costs” for Amazon in the current quarter, the company said in its earnings statement.
Tech giant Apple also disappointed Wall Street in its fiscal first-quarter financial results, with major iPhone sales missing expectations even after the launch of its latest iPhone 13 series phones. Shares of Apple suppliers including Taiwan Semiconductor Manufacturing Co. also fell. (TSM), Qualcomm (QCOM) and Broadcom (AVGO) as soon as results come in.
For Wall Street, the findings appear to justify concerns that growing supply chain disruptions, labor costs and material shortages are affecting businesses of all sizes heading into the holiday season, and are creating challenges for businesses to keep pace with rising demand.
For Apple, Amazon and some other tech companies, investors also feared that these key members of last year’s lucrative “stay at home” business would not be able to sustain high growth rates in the wake of the pandemic’s sudden surge in their businesses. Amazon sales grew 15% in the third quarter, slowing significantly from 27% in the second quarter.
Rebecca Felton, chief market analyst at Riverfront Investment Group, told Yahoo Finance Live about the tech companies on Thursday: “I’d agree that it’s exaggerated, but remember that valuation is a condition, not a motivator. And the incentive I think for tech will be consistency in both the top and bottom.” .
Meanwhile, investors continued to digest a mixed batch of economic data results, which included a weaker-than-expected reading of third-quarter GDP. Although comprehensive in scope, the report still provides only a retrospective view of the state of the economy. Some critics noted that economic activity had already begun to recover, which helped boost corporate performance in the final months of the year and stock prices.
“I still think the best is yet to come,” Heritage Capital President Paul Schatz Yahoo Finance on Thursday. “Q3 GDP will be low. We will have much stronger growth in the fourth and first quarters of next year, inflation will peak in the next six months, and supply chain issues moderate severely by the second quarter of next year. This high tide will lift most ships” .
“Economically sensitive trade, whatever you want to call it – reopening, deflation, inflation – this trade is very lively, very good and not over yet,” he added.
4:03pm ET: Stocks End at Records, S&P 500 Records Best Monthly Progress Since November 2020
Here is where the markets closed Friday’s session:
Standard & Poor’s 500 (^ Salafist Group for Preaching and Combat): +8.96 (+0.19%) to 4605.38
dow (^ DJI): +89.01 (+0.25%) to 35819.49
Nasdaq (^ ninth): +50.27 (+0.33%) to 15498.39
2:39 pm ET: Microsoft has overtaken Apple as the most valuable stock in the US by market capitalization
Shares of Microsoft (MSFT) jumped on Friday, driving the stock’s market capitalization above Apple and making it the most valuable stock in the United States.
The Washington-based Redmond company was the best performer in the Dow on Friday, extending gains after reporting better-than-expected quarterly results earlier this week as the Microsoft Azure cloud unit surged in growth again. As of Friday afternoon, Microsoft’s market capitalization was hovering at $2.478 trillion, versus Apple’s $2.466 trillion, based on Yahoo financial data.
12:30 p.m. ET: S&P 500, Nasdaq turns higher to jump to all-day high
Stocks reversed course to rush into positive territory in afternoon trading, led by gains in the telecom services and healthcare sectors in the S&P 500. The Dow Jones reversed its previous losses by as much as 97 points to rise more than 110 points, or 0.3%.
The Nasdaq Composite and Nasdaq 100 also hit intraday records despite declines in technology heavyweights Amazon and Apple.
9:31 a.m. ET: Stocks fall as tech stocks lag
Here is where the markets traded after the opening bell:
Standard & Poor’s 500 (^ Salafist Group for Preaching and Combat): -23.57 (-0.51%) to 4572.85
dow (^ DJI): -15.81 (-0.04%) to 35714.67
Nasdaq (^ ninth): -111.67 (-0.72%) to 15339.63
raw (CL = F.):- $0.72 (-0.87%) to $82.09 per barrel
Went (GC = F.): – $21.60 (-1.2%) to $1,781.00 per ounce
Treasury for 10 years)^ degeneration): +2.9 basis points to produce 1.598%
8:41 a.m. ET: Core PCE inflation rose 3.6% in September from a year ago, matching August’s rate
The Fed’s preferred measure of inflation rose at the expected annual rate in September, settling at a historically high level but avoiding an expected acceleration.
The Bureau of Economic Analysis said Friday that core personal consumption expenditures, which captures core price changes and excludes volatile food and energy prices, rose 3.6% in September from a year ago. This was in line with the expected rate of change, according to Bloomberg data, and matched the previous month’s gain.
On a monthly basis, the core PCE index rose 0.2%, slowing slightly from August’s 0.3% rise.
The broader measure of personal consumption expenditures increased 0.3% in September from August and 4.4% in September from a year ago. Both of these metrics match expectations.
8:33 a.m. ET: Personal income falls more than expected in September while spending matches estimates
Personal income posted a larger-than-expected monthly decline in September as stimulus from more government crisis relief programs waned. However, spending rose in line with estimates.
The Bureau of Economic Analysis said Friday that US consumer income fell 1.0% in September compared to August. This was larger than the expected 0.3% decline, according to Bloomberg Consensus data. The Bureau of Economic Analysis noted that the end of boosted federal unemployment benefits in early September was one of the main factors contributing to the decline.
Meanwhile, spending rose 0.6%, matching expectations. This followed a 0.8% monthly rise in consumer spending in August.
7:22 a.m. ET Friday: Stock futures drop, with Apple and Amazon impacting the Nasdaq
Here is where the markets were trading before the opening bell:
S&P 500 futures contractsES = F.): -22.25 points (-0.49%) to 4,565.25
Dow futures contractsYM = F.): -42 points (-0.12%) to 35,571.00
Nasdaq futures contractsNQ = F.): -137.00 points (-0.87%) to 15,627.75 points
raw (CL = F.): + $0.20 (+0.24%) to $83.01 per barrel
Went (GC = F.):- $5.80 (-0.32%) to $1,796.80 per ounce
Treasury for 10 years)^ degeneration): +3.4 basis points to produce 1.603%
Emily McCormick is a reporter for Yahoo Finance. Follow her on Twitter