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Market Drop as Meta, Microsoft Warnings Weigh Heavy on Nasdaq; Dollar Softens Post U.S. Data

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Global stock markets took a downturn on Thursday, led by a 2% drop in the Nasdaq index following cost warnings from Meta Platforms and Microsoft over artificial intelligence investments. Meta and Microsoft shares slid 3.2% and 5.6%, respectively, raising investor concerns over the time it will take to see returns on AI expenses. Both companies’ declines contributed to negative momentum on the Nasdaq and S&P 500. Attention now shifts to Amazon and Apple, which are set to release their results later.

U.S. consumer spending data showed a slight uptick in September, pushing the economy onto a stronger growth path for Q4. However, the increase is largely attributed to essential spending areas such as healthcare and housing. The dollar saw minor weakening, with notable losses against the yen after the Bank of Japan’s unexpectedly less dovish stance, and the euro gained ground due to unexpectedly high inflation figures in the Eurozone for October.

The dollar index remained steady at 104.13, while the euro inched up to $1.0866, and the dollar slipped 0.53% to 152.59 yen. As the November Fed meeting approaches, market sentiment sees a 25-basis-point rate reduction as likely, but a double cut in November and December stands at a 70% probability per the CME FedWatch Tool. Key upcoming data include the U.S. October jobs report and next week’s presidential election, where polling shows tight competition between Republican Donald Trump and Democratic VP Kamala Harris.

On Wall Street, the Dow dropped 362.70 points (0.86%) to 41,778.84, the S&P 500 shed 84.93 points (1.46%) to 5,728.74, and the Nasdaq Composite slid 425.71 points (2.29%) to 18,182.22. MSCI’s global index (.MIWD00000PUS) dropped 1.27%, while Europe’s STOXX 600 fell 1.5%, reaching a seven-week low amid a busy earnings period.

In U.S. Treasuries, yields edged higher with the 10-year benchmark up 4.4 basis points at 4.309%, following reports of declining wage inflation coupled with robust consumer spending.

Cryptocurrencies followed the downward trend, with Bitcoin declining 3.02% to $70,640.00 and Ethereum dropping 4.98% to $2,545.70. Gold prices retreated from record highs but stayed on track for a fourth consecutive monthly increase, down 0.7% to $2,766.59 per ounce after peaking at $2,790.15 earlier. Oil prices saw gains, with U.S. crude rising 1.33% to $69.52 per barrel and Brent climbing 0.94% to $73.23 per barrel.

 

Ford Cuts Profit Outlook, Faces Stock Drop

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Ford Motor Co. announced on Monday that it now anticipates meeting only the lower end of its full-year profit expectations, leading to a 5% dip in after-hours stock trading. The automaker forecasts annual earnings before interest and taxes (EBIT) around $10 billion, down from the previous $10-12 billion target.

Financial Performance and EV Adjustments

Despite its weakened forecast, Ford’s third-quarter earnings came in slightly better than expected, with adjusted profits of $0.49 per share compared to analysts’ projections of $0.47. However, net income dropped to $900 million, or $0.22 per share, from $0.30 per share a year ago, influenced by a $1 billion charge incurred after the cancellation of a three-row electric SUV in August.

CEO Jim Farley’s strategic cutbacks in Ford’s electric vehicle (EV) segment reflect intensified competition from Tesla and emerging Chinese EV brands. The scrapped three-row EV, once projected as a “personal bullet train,” was ultimately deemed unprofitable within the necessary timeframe for EV business sustainability.

EV Losses and Cost-Cutting Initiatives

Ford’s electric vehicle segment is projected to incur a $5 billion loss this year, with an EBIT loss of $1.2 billion in the third quarter alone, raising the segment’s total loss for 2024’s first three quarters to $3.7 billion. Although the company made cost improvements totaling nearly $1 billion over the past year, industry-wide pricing pressures have limited visible gains.

Looking ahead, Ford remains committed to cutting $2 billion in annual expenses by year-end through reductions in materials, manufacturing, and freight costs. Chief Financial Officer John Lawler noted that pricing pressures are likely to persist, potentially offsetting cost gains.

Market Reactions and Competitor Insights

Ford’s stock has declined 6% this year, a relatively smaller drop than Jeep-manufacturer Stellantis, whose shares have fallen by 40%. Conversely, General Motors has led the “Big Three” automakers in stock performance, with shares up 47% following robust earnings and consistently improved financial guidance.

 

5 Things to Know Before the Stock Market Opens Monday

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  1. Running to Records U.S. stocks are riding a steady climb to new highs. Both the S&P 500 and Dow Jones Industrial Average closed at record levels on Friday, with the Nasdaq Composite also showing strong gains. Last week saw all three indexes rising by over 1%. As the markets focus on several key events, including the U.S. presidential election, conflicts in the Middle East, and Federal Reserve policy, this week’s earnings reports will further shape the stock market’s trajectory.
  2. Banking on Earnings This week will be packed with earnings reports from major companies, especially from the financial sector. Last Friday, JPMorgan Chase and Wells Fargo exceeded expectations, helping push stock markets higher. Among the big names to report earnings this week are:
    • Tuesday: Johnson & Johnson, Bank of America, Walgreens Boots Alliance, Goldman Sachs, Citigroup, United Airlines
    • Wednesday: Morgan Stanley
    • Thursday: Netflix
    • Friday: Procter & Gamble
  3. Boeing Cuts Boeing is grappling with financial challenges as it plans to cut 17,000 jobs, representing 10% of its workforce. This comes amid production disruptions caused by a machinist strike and ongoing difficulties. The company is also delaying the delivery of its 777X wide-body plane until 2026, and expects to report a significant third-quarter loss of $9.97 per share. CEO Kelly Ortberg outlined the tough restructuring decisions necessary to keep the company competitive.
  4. SpaceX Milestone SpaceX achieved a key breakthrough on Sunday with the successful fifth test flight of its Starship rocket. In a historic first, the rocket’s booster was caught by the launch tower arms after its ascent. This marks a crucial step toward making the Starship system reusable. After launching, the rocket entered space and traveled halfway around the Earth before splashing down in the Indian Ocean.
  5. 2024 Policy Stakes The 2024 U.S. election carries major implications for corporate America. Vice President Kamala Harris and former President Donald Trump hold divergent views on key issues like taxes, tariffs, regulation, healthcare, and clean energy. The election’s outcome will likely have significant impacts on industries such as airlines, banks, electric vehicles, and technology. The policies proposed by each candidate could lead to vastly different outcomes for companies across sectors.