Thursday Market: Stocks Dip on Earnings, Fed and GDP Data

U.S. stock futures dipped Thursday as traders processed the latest corporate earnings and economic indicators. As of early Thursday, futures for the Dow Jones Industrial Average dropped 0.55%, the S&P 500 futures were down by 0.8%, and Nasdaq 100 futures slid 1.0%. A close eye will be on Amazon (NASDAQ:AMZN) and Apple (NASDAQ:AAPL), who are set to report earnings that could heavily sway market sentiment.

The Federal Reserve’s preferred inflation gauge, the Personal Consumption Expenditures (PCE) Price Index, is set for release at 8:30 a.m. ET. This data could weigh on the Fed’s interest rate decision next week, as inflation remains a sticking point in their economic strategy. The Fed recently cut interest rates by a half-percentage point, placing the current rate between 4.75% and 5.00%. Markets now anticipate an additional cut of 25 basis points when officials meet on November 7.

Premarket Movers:

Economic Growth and Consumer Spending Trends

In the third quarter, the U.S. economy grew at an annualized rate of 2.8%, falling short of the 3.1% forecast by economists and also below the second quarter’s 3.0% pace.

Robust consumer spending accounted for about two-thirds of the GDP, growing at 3.7%—its fastest clip since early 2023. However, mixed economic indicators could signal a potential slowdown if inflation continues to erode purchasing power.

Labor Market Updates

The labor market showed resilience as initial jobless claims dropped to a seasonally adjusted 216,000 for the week ending October 26, well below analysts’ forecasts of 230,000. The Labor Department’s upcoming October employment report on Friday may provide further insight, though analysts expect little change in the 4.1% unemployment rate.

Seasonal disruptions, like hurricanes Helene and Milton, initially pushed jobless claims higher in early October, with labor strikes further impacting numbers. Boeing’s furloughs due to strike action and other disruptions likely restrained job growth, with the total payroll drag estimated at around 70,000 jobs.

Corporate Earnings Underwhelm

Corporate earnings have shown mixed results this quarter, with several major companies missing expectations.

Starbucks (NASDAQ:SBUX), for instance, posted a 3% decline in net sales to $9.07 billion, citing weakening demand in both the U.S. and China, with foot traffic in U.S. stores dropping 10%. CEO Brian Niccol outlined a new strategy aimed at faster service, to serve customers in under four minutes.

Meanwhile, Microsoft (NASDAQ:MSFT) saw its stock slide by 4% following a weaker-than-expected forecast for the upcoming quarter. While Microsoft’s revenue for the last quarter surpassed analysts' estimates, it expects between $68.1 billion and $69.1 billion in the current quarter, lower than the $69.8 billion anticipated by the market.