UPDATE: Wall Street’s major indexes are experiencing a sharp decline, hitting over one-week lows, after big banks issued urgent warnings of a potential market sell-off. Just moments ago, CEOs from Morgan Stanley and Goldman Sachs cautioned that equity markets could face a significant downturn of approximately 10% to 15%.
This alarming forecast comes amid a disappointing reaction to Palantir Technologies‘ upbeat sales projections, with shares plummeting 8.7% despite the company forecasting fourth-quarter revenue above analysts’ expectations. The stock has surged nearly 400% in the past year, yet investor confidence appears shaken.
In early trading on October 31, 2023, the Dow Jones Industrial Average dropped 301.32 points, or 0.64%, to 47,035.36. The S&P 500 fell 62.20 points, or 0.90%, to 6,790.53, while the Nasdaq Composite lost 291.37 points, or 1.22%, to 23,543.35.
Concerns are mounting as the CBOE Volatility Index, often referred to as Wall Street’s fear gauge, approached a two-week high. Following a month of record highs, anxiety over the sustainability of tech-driven gains is prompting investors to reconsider their positions.
“The market’s been moving higher as warranted from an earnings standpoint, but at some point…it seemed like it was kind of positioning for a risk-off pullback even on the slightest disappointment,”
said Keith Buchanan, senior portfolio manager at Globalt Investments.
As investors brace for more volatility, all eyes are on earnings reports from Advanced Micro Devices and Super Micro Computer, set to release their results after the bell today. The overall earnings landscape remains resilient, with over 83% of S&P 500 companies exceeding analyst expectations this quarter, significantly higher than the long-term average of 67.2%, according to LSEG data.
Adding to the uncertainty, the ongoing US government shutdown has reached a record length, which has intensified investor focus on private data. The ADP National Employment numbers, releasing tomorrow, will be closely monitored for insights into the job market and economic health.
In addition to economic indicators, local elections for New York’s mayor and governors in New Jersey and Virginia are poised to influence market sentiment, as political outcomes often sway investor confidence.
On the individual stock front, Uber saw a steep decline of 8.6% after missing quarterly profit expectations, while Henry Schein surged 13.4% following an optimistic annual profit forecast. Notably, shares for Spotify and Shopify reversed earlier gains, falling 3.5% and 3.1%, respectively, post their earnings releases.
The market’s downturn is reflected in the breadth of declines, with declining issues outnumbering advancers by a ratio of 4.18-to-1 on the NYSE and 3.97-to-1 on the Nasdaq. The S&P 500 recorded five new 52-week highs and seven new lows, while the Nasdaq Composite saw 16 new highs and a staggering 137 new lows.
As the situation develops, investors are urged to stay updated on these key economic indicators and corporate earnings, which may provide critical insights into market direction in the coming days.
