Wall Street's three major indexes lost ground on Thursday with the Nasdaq Composite and the S&P 500 leading losses as Meta and Microsoft shares tumbled on worries over surging AI spending, while investors also digested a more hawkish tone from the U.S. Federal Reserve.
Market Snapshot
The Dow Jones Industrial Average fell 109.88 points, or 0.23%, to 47,522.12, the S&P 500 lost 68.25 points, or 0.99%, to 6,822.34 and the Nasdaq Composite lost 377.33 points, or 1.57%, to 23,581.15.
Market Movers
Amazon.com forecast quarterly revenue largely above Wall Street estimates on Thursday on strong demand for its cloud services as businesses continue to spend relentlessly on artificial intelligence software development. Shares of Amazon soared 13% in extended trading, lifting the company's market value by about $270 billion.
Apple Chief Executive Tim Cook on Thursday gave a forecast for holiday quarter iPhone sales and overall revenue that beat Wall Street expectations, powered by orders for iPhone 17 models that the company is racing to fulfill amid continuing supply constraints. Shares of Apple jumped over 2% in extended trading.
Meta Platforms missed analysts' third-quarter earnings expectations and the stock declined 11%. Meta said the earnings miss included a one-time tax charge of $15.93 billion from the implementation of the Trump administration's One Big Beautiful Bill Act. Excluding the charge, earnings would have been $7.25 a share, better than forecasts of $6.72. The owner of Facebook and Instagram reported a revenue increase in the period of 26% from a year earlier to $51.24 billion. Meta said it expects fourth-quarter revenue of between $56 billion and $59 billion, about what analysts expected. The company said capital expenditures related to AI likely would increase significantly next year.
Microsoft fell 2.9%. The software company and the second-most valuable U.S. corporation, which finished Wednesday with a market cap of $4.025 trillion, reported fiscal first-quarter adjusted earnings of $4.13 a share, better than Wall Street consensus of $3.67. Revenue was $77.7 billion, ahead of analysts' expectations of $75.4 billion, while Azure revenue rose by 40%, higher than forecasts of 38% growth. CEO Satya Nadella said the company's total AI capacity would grow by more than 80% this year with its data center footprint doubling over the next two years.
Shares of Alphabet rose 2.5% after the parent company of search giant Google reported a jump of 16% in third-quarter revenue on growth in its digital-advertising and cloud-computing businesses. Revenue was a record $102.3 billion, better than Wall Street expectations, and net income rose 33% from a year earlier to nearly $35 billion. Alphabet raised its estimates for capital expenditures this year, largely for AI investments, to a range of $91 billion to $93 billion, up from $52.5 billion in 2024.
Nvidia declined 2% after the chip maker and most valuable company in the U.S. finished up 3% on Wednesday at $207.04, a record, and closed the session with a market capitalization of $5.03 trillion. The move lower Thursday came amid disappointment the company still isn't immediately allowed to resume sales in China.
Apple, which closed Wednesday with a market cap of $4.002 trillion, gained 0.6% ahead of the release of the iPhone maker's fiscal fourth-quarter earnings after the closing bell Thursday, while Amazon.com fell 3.2% with the world's largest online retailer scheduled to report third-quarter numbers.
Eli Lilly rose 3.8% after the drugmaker reported third-quarter adjusted earnings of $7.02 a share, well above Wall Street expectations of $5.89. Revenue totaled $17.6 billion, up 54% from a year earlier and ahead of Wall Street's call for $16.1 billion.
Pharmaceutical distributor Cardinal Health posted a strong first quarter and raised its fiscal-year outlook, sending the stock up 15%.
Third-quarter revenue at Guardant Health rose from a year earlier and the cancer screening and testing company boosted its full-year outlook. The stock soared 28%.
Metsera soared 22% to $63.73 after Novo Nordisk offered up to $9 billion to acquire the obesity-drug developer, looking to outbid earlier suitor Pfizer. Novo said it offered $56.50 a share in cash for Metsera, plus potentially a further $21.25 a share based on clinical and regulatory milestones. Pfizer said last month it would pay up to $47.50 a share for Metsera, with bonus payments worth up to $22.50 a share.
Roblox slumped 16%, even as the gaming platform's third-quarter bookings of $1.9 billion beat Wall Street estimates of $1.7 billion. Fourth-quarter bookings guidance was strong at over $2 billion, ahead of consensus estimates of $1.8 billion.
FMC Corp. sank 47% after the agricultural sciences company reduced its quarterly dividend by 86% to 8 cents a share from 58 cents. FMC said it cut its dividend to "further prioritize debt reduction."
Carvana beat third-quarter earnings expectations on record revenue of $5.65 billion and number of cars sold. It was Carvana's third-consecutive quarter of revenue growth, with the number of cars sold reaching 155,941, up 44% from a year earlier. Carvana said it expects sales trends to continue into the end of the year, forecasting retail units sold above 150,000 in the fourth quarter. The stock, however, tumbled 14%.
Chipotle Mexican Grill posted third-quarter earnings and revenue in line with analysts' estimates, but the burrito chain tumbled 18% after lowering its same-store sales outlook for the full year.
Shares of eBay were down 16% after the online marketplace topped Wall Street's earnings and revenue estimates, but issued a weaker-than-expected profit forecast for the fourth quarter.
Market News
Trump Shaves China Tariffs in Deal with Xi on Fentanyl, Rare Earths
U.S. President Donald Trump said on Thursday he had agreed with President Xi Jinping to trim tariffs on China in exchange for Beijing cracking down on the illicit fentanyl trade, resuming U.S. soybean purchases and keeping rare earths exports flowing.
Trump's face-to-face talks with Xi in the South Korean city of Busan, their first since 2019, marked the finale of a whirlwind Asia trip on which he also touted trade breakthroughs with South Korea, Japan and Southeast Asian nations. The deal, according to Beijing, also included a U.S. pledge to delay for a year a new measure -- strongly opposed by China -- to bar thousands of Chinese firms from receiving U.S. technology if they are part-owned by a sanctioned company.
US Weekly Jobless Claims Fall, Economists Estimate
The number of Americans filing new applications for unemployment benefits fell last week, economists estimated on Thursday, though new job opportunities for those who are laid off remained scarce amid a reluctance by businesses to boost hiring.
Initial claims for state unemployment benefits dropped to a seasonally adjusted 219,000 for the week ended October 25 from 232,000 in the prior week, JPMorgan calculated. Estimates from Goldman Sachs and Nationwide were within that ballpark.