US STOCKS-Wall St ends lower as Meta, Microsoft highlight AI costs

Monolithic Power Systems

31/10/2024 20:00

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      Meta Platforms, Microsoft drag megacaps lower
    

        * 
      Estee Lauder on track for worst day on record
    

        * 
      September PCE data in line with estimates 
    

  
 (Updates to close)
    By Abigail Summerville
       Oct 31 (Reuters) - 
    Major U.S. stock indexes closed lower on Thursday after
Microsoft and Meta Platforms highlighted growing artificial
intelligence costs that could hit their earnings, curbing
enthusiasm for megacaps that have fueled the market rally this
year.
    Shares of Facebook-owner Meta Platforms  META.O  and
Microsoft  MSFT.O  fell, despite both companies beating earnings
estimates in results reported after the bell on Wednesday.
        Other so-called Magnificent Seven megacap technology
stocks also slipped. Amazon.com  AMZN.O  and Apple  AAPL.O 
dropped ahead of their quarterly results, due after the market
close. Shares of Alphabet  GOOGL.O , which reported on Tuesday,
also fell.
        "You had three of the Magnificent Seven all say they
basically have open-ended budgets for AI spend and investors
don't like to hear that," said Carol Schleif, chief investment
officer at BMO Family Office.
  
        "The intermediate and longer-term implications of this
buildout are really important for U.S. long-term growth and
long-term productivity. ... In the short run, investors are
asking where's the profit from it?"
  
        Microsoft and Meta both said their 
    capital expenses
     were growing due to AI investments, which could reduce
profitability.
  
        According to preliminary data, the S&P 500
 .SPX  lost 110.39 points, or 1.90%, to end at 5,703.28 points,
while the Nasdaq Composite  .IXIC  lost 522.07 points, or 2.81%,
to 18,085.86. The Dow Jones Industrial Average
 .DJI  fell 380.02 points, or 0.93%, to 41,761.52.
    
  
    The Personal Consumption Expenditures price index, the
Federal Reserve's preferred inflation metric, rose 0.2% in
September, in line with economists' expectations. However, the
core figure was 2.7% year-over-year, slightly above the 2.6%
forecast, while consumer spending increased a little more than
expected.
    After the data, traders stuck to bets for a 25-basis-point
rate reduction in the Fed's November meeting. 
        "We do expect them to cut by a quarter next week because
there is nothing in the data this week that should throw them
off of that," Schleif said.
  
    
        
  
    Information technology  .SPLRCT  led declines among sectors,
but upbeat results from ConocoPhillips  COP.N  and Entergy
 ETR.N  lifted energy  .SPNY  and utilities  .SPLRCU .
    An index of chip stocks  .SOX  fell, led by plunging shares
in Monolithic Power Systems  MPWR.O  after the maker of power
control products and semiconductors used in vehicles reported
its results. Nvidia  NVDA.O  also dropped.
    The VIX  .VIX , Wall Street's "fear gauge," ticked up as
investors braced for more volatility in the next few weeks from
corporate results and the Nov. 5 U.S. presidential election
followed by the Fed's policy-setting meeting.

    
    
    Estee Lauder  EL.N  slumped, on track for its worst day on
record, after the cosmetics company withdrew its 2025 annual
forecasts.
    Shares of Uber Technologies  UBER.N  plunged after the
ride-hailing company forecast fourth-quarter gross bookings
below expectations.

    <^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^
The Magnificent Seven    https://reut.rs/4fgLCgW
S&P 500 ahead of US presidential elections    https://reut.rs/3NNjZQM
    ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^>
 (Reporting by Abigail Summerville in New York; Editing by
Richard Chang)
 ((Abigail.Summerville@thomsonreuters.com))