Dow rises after GDP data, tech stocks drag down Nasdaq, S&P 500

U.S. stocks were mixed Thursday as investors braced for another batch of tech earnings from Amazon (AMZN) and Apple (AAPL) and dissected a better-than-expected U.S. GDP report.

The Dow Jones Industrial Average (^DJI) and technology-heavy Nasdaq Composite (^IXIC) diverged, with the Dow inched higher by 0.62% and the Nasdaq fell 1.63%. Tech stocks also dragged down the S&P 500 (^GSPC), which edged lower by 0.6%.

Stocks had rallied to start the week on positive signals from Federal Reserve officials concerned with the pace of the interest rate hikes ahead of their November meeting, as well as a slew of better-than-expected third-quarter earnings.

But the rally ran out of steam amid two lackluster reports from Alphabet (GOOGL) and Microsoft (MSFT), which raised concerns about slowing economic growth.

Big Tech’s struggles continued Wednesday and Thursday. Facebook parent Meta Platforms (META) posted a second quarterly revenue decline. It continues to be rocky. Meta stock was down more than 24% at the close.

“Look, across the board, tech continues to miss. And they’re disappointing— I think what’s most disappointing are the expenses,” Jefferies senior analyst Brent Thill told Yahoo Finance Live on Wednesday after Meta’s earnings.

“I think everyone wants Zuckerberg to hit the air brakes on expenditures. The fact that they’re holding headcount flat is good, but I think everyone is calling for more severe measures in terms of trimming headcount, trimming expenses to get a hold of what’s happening in this macro storm,” Thill added.

Later on Thursday, Amazon (AMZN) released earnings after the bell, reporting revenue that came in under Wall Street estimates. Amazon stock plunged nearly 20% after hours. Intel (INTC), meanwhile, cut its adjusted revenue guidance for the year.

A report from the Commerce Department released on Thursday delivered more positive news about the U.S. economy, showing the nation’s gross domestic product grew at an annual rate of 2.6% in July through September after recording two consecutive quarters of negative growth. Economists surveyed by Bloomberg had estimated a 2.4% uptick.

“All the growth in GDP was due to a huge swing in net foreign trade, contributing 2.8 percentage points, while domestic final demand rose only 0.5%,” Ian Shepherdson, Chief Economist at Pantheon Macroeconomics wrote in a statement.

Also on the earnings front Thursday:

• Southwest Airlines (LUV): The airline posted results before the bell forecasting a higher fourth-quarter revenue as travel demand still holds strong.
• Shopify (SHOP): The e-commerce firm reported a smaller-than-expected quarterly loss, while revenue topped expectations after adding more avenues for merchants to sell and promote their products.
• Caterpillar Inc. (CAT): The construction-equipment maker posted earnings that topped expectations even with slowdown of sales growth in Asia.
• McDonald’s (MCD): The fast-food chain beat Wall Street estimates for its third-quarter earnings and revenue despite currency fluctuations.
• Shell (SHEL): The British oil major reported quarterly profits which more than doubled from the same period last year. The oil giant announced it would buy back $4 billion worth of shares and increase its dividend by 15%.
• Credit Suisse (CS): The Swiss posted a $4 billion loss as the investment bank radically restructures over the next three years.
• Mastercard (MA): The payments giant topped expectations with its latest revenue and earnings numbers as strong consumer spending and a return to travel bolstered the results amid recessionary fears.
• Comcast (CMCSA): The cable-and-entertainment giant reported quarterly earnings that beat analysts estimates as it grapples with industry headwinds. The company said it added just 14,000 broadband subscribers in the third quarter and saw ad revenue decline in the wake of the absence of an Olympics telecast this year.
• Honeywell International (HON): The conglomerate raised its full-year profit forecast, while expressing confidence in demand outlook amid economic headwinds.

Apple (AAPL) is next on deck to report earnings Thursday after the bell.

Also on Wall Street’s plate was Twitter’s drama-filled acquisition deal. Elon Musk paid a visit to Twitter’s headquarters ahead of his Friday deadline as banks have started to send $13 billion, the Wall Street Journal reported. The move indicates that the deal is on track to close.

“The $44 billion price tag for Twitter will go down as one of the most overpaid tech acquisitions in the history of M&A deals on the Street in our opinion,” Wedbush Securities analyst Dan Ives wrote in a note to clients. “With fair value that we would peg at roughly $25 billion, Musk buying Twitter remains a major head scratcher that ultimately he could not get out of once the Delaware Courts got involved.”

Yields on the 10-year Treasury note hovered around 4% after hitting 4.291% on Monday. A gauge of the dollar gained following two consecutive days of declines.

In the energy market, Brent crude, the international benchmark for oil prices, rose 1.13% to trade at $96.77 a barrel.

Elsewhere, the European Central Bank raised its interest rate by 75 basis points to 2.0%, the highest level since 2008. The ECB expects to increase the pace of interest rates over the next meetings.

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