October 31, 2024

In what had to be one of the worst intraday negative turnarounds for the major indices, they all ended lower after having been strongly higher in the late morning. And this fading out into the close has been a bit of a feature lately, namely ending much lower than the best levels of the session.

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For instance, the Dow finished with a closing decline of 91 down to 42,141 after having been ahead by 224 as weakness in AAPL, CAT on earnings, IBM which has come down after a nice report recently and MCD on its own recent troubles did this index in.

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Same pattern for the S&P which turned an 18 point gain into a closing loss of 19 down to 5814 on selling in AAPL, AMD after a poor report, LLY on a really bad reaction to its earnings and pathetic TSLA which has fallen apart again after its brief recent earnings gains last week and which now has fooled its high-priced call buyers into ending the week with huge losses for the second week in a row.

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The Nasdaq also did a complete negative turnaround which turned a 72 point gain into a closing decline of 105 on those technology declines as mentioned above in addition to NFLX, META which also ended lower after being higher all day and so on. This action followed the index’s own record high from the day before.

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The Russell 2000 Index of small stocks also eased negative with a 5 point ending decline and these negative patterns allowed the VIX to end higher at 20.35 which makes it go nowhere in the middle of all the recent volatility in stocks.

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Declines for LLY and AMD overshadowed a jump for GOOG’s parent company. It gained almost 3% after beating analysts’ forecasts for profit in the latest quarter, thanks largely to the performance of its Google business. These Magnificent 7 group of stocks will continue to do this because critics say their prices have climbed too quickly, even if artificial-intelligence technology is creating a new boom.

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Computer chip companies have been some of the biggest winners of the AI rush, but AMD helped drag down stocks across the industry after reporting profit for the latest quarter that only matched analysts’ expectations. It also gave a forecasted range for revenue for the end of 2024 whose midpoint was a bit below what analysts were estimating. And its stock sank by 10.6%.

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NVDA, the chip giant that has rocketed to become one of the largest and most influential stocks, fell 1.4% and was one of the heaviest weights on the S&P.

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One of the few stocks to hurt the index nearly as much was LLY, which sank 6% amid concerns about two of the drug maker’s blockbuster products: diabetes treatment Mounjaro and weight loss counterpart Zepbound.

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It reported weaker results for the latest quarter than analysts expected, as pharmaceutical wholesalers burned through inventories they had built up in previous quarters and it cut its forecast for profit over the full year of 2024.

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Also falling was DJT, the company behind former Donald Trump’s Truth Social platform. It dropped 22% for the worst loss since taking its place on the Nasdaq stock market following a merger with another company in March. The stock is notoriously volatile, and it had rallied strongly over the last month, up to around $50 from $12.

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Among the biggest movers was RDDT, which skyrocketed by 42% after the company surprised investors and analysts with a reported profit.

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SMCI lost nearly a third of its value, 33% after Ernst & Young resigned as its registered public accounting firm. A prominent investor, Hindenburg Research, published a report in August that accused the company of accounting red flags and other issues, which the CEO later said contained false or inaccurate statements.

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In the bond market, yields edged higher following the latest readings on the U.S. economy, with the first estimate of 3Q G.D.P coming in at 2.8%, slightly better than economists expected. In addition, September pending home sales gained 7.4%.

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A string of stronger-than-expected reports on the economy has raised hopes of things continuing to do better, but it has also forced investors to ratchet back expectations for how deeply the Fed will ultimately cut rates.

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The yield on the 10-year Treasury rose to 4.28% from 4.26% late Tuesday and just 3.60% in the middle of last month.

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Traders are largely expecting the Fed to cut its federal funds rate by a quarter of a percentage point at its next meeting according to data from CME Group. That would be a step down from its cut of half a percentage point last month, which kicked off the Fed’s rate-easing campaign.

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In stock markets abroad, indexes were mostly lower in Europe and Asia despite a 1% rise for Japan’s Nikkei 225 as the Bank of Japan began a two-day policy meeting.

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This week will see five out of the Magnificent 7 companies reporting in addition to others and the lineup is as follows: yesterday – Dow component V plus GOOG, RDDT, SNAP, VMC higher while Dow component CAT in addition to AMD, CMG, CZR, LLY HUM were lower; today – BKNG, CVNA, ETSY, DASH, RBLX, CTSH, MA higher while Dow components MSFT and MRK are lower in addition to META, COIN, HOOD, EBAY, ROKU, EL, UBER and MSTR are lower; tonight - Dow components AMZN, AAPL, INTC; Friday – XOM and Dow component CVX.

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Economic reports will see: yesterday - the first estimate of 3Q G.D.P. came in at 2.8%; today – weekly jobless claims came in lower at 216K, September personal income and spending gained 0.3% and 0.5% respectively, September P.C.E. report rose by 0.2% and higher by 2.1% year over year; Friday – October non-farm payroll report for which the initial estimate is 125,000 with 4.1% unemployment rate.