The S&P 500 slid 0.33% to 5,813.67 points on Wednesday. The Dow Jones Industrial Average lost 91.51 points, or 0.22%, closing at 42,141.54. The tech-heavy Nasdaq Composite declined 0.56% to 18,607.93 after earlier rising to a fresh record high.
Alphabet, Google’s parent company, exceeded analysts’ expectations due to strong performance from its cloud business, causing shares to jump almost 3%. Conversely, shares of chipmaker AMD slid more than 10% as its fourth-quarter results failed to impress investors. The broader semiconductor sector further declined as shares of Super Micro Computer plunged nearly 33% after the departure of the company’s auditor raised concerns about its financial statements.
The U.S. economy grew at an annualized rate of 2.8% in the third quarter, falling short of economists’ expectations of a 3.1% increase as surveyed by Dow Jones. However, payrolls data showed a stronger-than-expected labor market with private-job creation jumping to its highest level in more than a year. Matt Stucky, chief portfolio manager at Northwestern Mutual, suggested that the market’s reaction will be more muted compared to 2016, with both candidates having a high likelihood of winning.
Alphabet’s stock surge on earnings
Bank of America maintains that the Federal Reserve is on track for a 25 basis point cut at its meeting next week. Analyst Shruti Mishra commented that despite potential surprises in the upcoming jobs report, the Fed is likely to proceed with the rate cut, especially with policy rates still close to 5%.
Super Micro Computer experienced its worst day since 2018, losing 32% after Ernst & Young resigned as its auditor. Garmin shares gained nearly 24% in afternoon trading following strong third-quarter results, putting the stock on pace for a record close. Financial advisory firm Janney Montgomery Scott warned that the S&P 500 could be due for a notable retreat, potentially in the first quarter of 2025.
They remain concerned about overbought conditions on longer-term charts, though recent bullish patterns support a price target of 6,200 for the S&P 500, reflecting an upside of more than 6%. Freedom Capital Markets strategist Jay Woods cautioned against outsized bets on former President Donald Trump winning the upcoming election, suggesting that polls are likely more accurate than betting odds. Options traders are also preparing for significant volatility around the election.
Goldman Sachs indicated that options market pricing points to a big move on election day, with SPX options implying a +/- 2.1% move.
