Friday’s uneven closing session marked the end of a challenging week for the markets as the S&P 500 (^GSPC) officially entered correction territory.
Despite recording gains earlier in the session, the S&P 500 ended the day down over 0.5%, while the Dow Jones Industrial Average (^DJI) lost more than 350 points, or almost 1.2%.
As worries about Big Tech subsided thanks to earnings from Amazon (AMZN) and Intel (INTC), the Nasdaq Composite (^IXIC) managed to hold onto gains, finishing up around 0.4%. A sell-off sparked by inconsistent earnings from megacap tech companies earlier this week caused the index to enter a correction.
According to data from the Commerce Department on Thursday, prices increased by 3.7% year over year in September and by 0.3% in September according to the “Core” Personal Consumption Expenditures (PCE) Index, which does not include the volatile food and energy categories. Prescription medication, vehicles, and travel accounted for the majority of the 0.3% rise in core PCE.
All categories combined, PCE increased 0.4% month over month and 3.4% year over year on a headline basis. The “core” PCE climbed at the lowest annual pace since May 2021 in September, which is the third consecutive month that prices have grown at a reduced annual rate.
After dropping around 0.5% to end a challenging week for markets, the S&P 500 (\GSPC) officially entered correction territory on Friday as stocks finished mixed.
The Nasdaq Composite (^IXIC) held onto gains, finishing up nearly 0.4%, while the Dow Jones Industrial Average (^DJI) fell roughly 1.2%, or more than 350 points. This week, the index had a revision.
The actions were prompted by the Federal Reserve’s preferred inflation measure, which revealed that while annual price gains continued to decrease in September, prices rose by the most in the previous month since May. This strengthened the case for the central bank to maintain interest rates “higher for longer.”
The S&P 500 (^GSPC), which had been rising earlier in the day, began to approach correction territory in late afternoon trade, losing almost 0.6% of its value.
Losses increased as well, with the Dow Jones Industrial Average (^DJI) falling by more than 400 points, or 1.2%.
The Nasdaq Composite (^IXIC) increased by about 0.2% but was still off of prior session highs. The actions coincide with improved earnings from Amazon (AMZN) and Intel (INTC), which allayed some worries about Big Tech in the wake of inconsistent performance from megacap brands like Alphabet, the parent company of Google (GOOG, GOOGL).
On the company’s earnings conference, Charter CFO Jessica Fischer stated, “The overall impact to customer relationships was less than we expected, facilitated in part by the wide availability of over-the-top alternative.”
In comparison to a 6% fall of 211,000 consumers in the same period last year, the number of residential video customers fell by 320,000 in the third quarter of 2023. This decline was “partly driven by video disconnects related to the temporary loss of Disney programming in early September.”
In their contract discussions, the two firms had reached a deadlock over whether Disney should provide its ad-supported streaming services at no cost to Charter customers as part of the telecom behemoth’s cable packages. A number of prominent athletic events, including the US Open, were affected by the blackout, which followed the
The corporations said on September 11 that they had come to a mutual understanding to terminate the media embargo. As part of the agreement, Charter will include a few Disney streaming services in some cable bundles at no extra cost to the customer. These services include the ad-supported Disney+, ESPN+, and ESPN’s upcoming direct-to-consumer offering.
However, it’s evident that the Disney issue wasn’t the cable giant’s only obstacle this quarter.
Amidst heightened competition, Charter exceeded its quarterly broadband expansion projections but also boosted its yearly expenditure estimate. The business raised its earlier estimate of $6.5 billion to $6.8 billion to $7.2 billion for the full year 2023 capital expenditures, excluding line extensions.
Sam Bankman-Fried started defending himself against allegations that he stole billions from his bitcoin exchange and used the money for real estate, investments, and political contributions.
Nonetheless, he acknowledged that he “made a number of big mistakes and a number of small mistakes.” He claimed that not having a chief risk officer was his worst error.
He remarked, “A lot of people got hurt.”
His lawyer Mark Cohen started his much awaited testimony on Friday morning by attempting to hit at the core of the government’s case against his client.
Ford’s top-line sales for the quarter came in at $43.8 billion compared to a projected $41.21 billion, up almost 11% from the previous year but down from the $45.0 billion recorded in Q2. Ford reported adjusted EBIT of $2.2 billion and adjusted profits per share of $0.39 compared to a projected $0.47.
Regarding forecast, Ford stated that as of the third quarter, adjusted EBIT had reached $9.4 billion, falling short of the $11 billion to $12 billion full-year range that the company had confirmed in late July.
“However, given effects of the UAW strike and with ratification of the tentative agreement with the union that was announced Wednesday night pending, Ford is withdrawing its guidance for full-year 2023 operating results,” the business stated in a statement.
Ford declared a $1.33 billion loss for its Model e EV division. Although the business said that issues with its current-generation EVs still exist, it attributed the segment’s loss to investments in next-generation cars.
“Many North America customers interested in buying EVs are unwilling to pay premiums for them over petrol or hybrid vehicles, sharply compressing EV prices and profitability,” the business stated in a statement.
While the benchmark S&P 500 (^GSPC) lost earlier gains to trade broadly flat, the tech-heavy Nasdaq Composite (^IXIC), which finished Thursday deep in the red, rallied back on Friday, up nearly 0.9%. Stocks were mixed during noon trading on Friday. The DJI, or Dow Jones Industrial Average, fell more than 180 points, or almost 0.6%.
The benchmark 10-year yield (^TNX) increased by around 3 basis points to trade at 4.88% following a four-month high in monthly core PCE prices due to acceleration in expenditure.
That is obviously unsustainable, and we anticipate a significant slowdown in spending growth in the upcoming quarters,” chief economist Michael Pearce of Oxford Economics stated in response to the findings.
“Disposable income growth has come under pressure as wage and job growth slows,” Pearce said. “A small budgetary tightening is also reflected in the weakness, as tax payments rise and transfer payments decrease. The personal savings rate dropped to 3.4% in September, the lowest level since December 2022, as a result of diminishing revenues financing increasing consumption through less saving.
“We expect the boost to spending from decreased saving to fade from here on out, even though we estimate there is still a large stock of excess saving left over from the epidemic. That stock is now primarily concentrated among higher income families and looks to be more considered as wealth. As the employment market weakens, we also anticipate a little increase in precautionary saving.”
The US economy expanded during the last three months at its strongest rate in almost two years, mostly due to consumers increasing their spending despite an environment with high borrowing rates. This Friday’s inflation report is related to this growth.
The IT giant’s shares increased by almost 7% following the release of financial results that exceeded projections and positive remarks on artificial intelligence. AWS, Amazon’s cloud computing division, stands to gain “tens of billions” in revenue from artificial intelligence, according to CEO Andy Jassy’s remarks to analysts on the earnings call.