Following a tech-led market selloff, U.S. equities opened higher Friday morning, with investors cautiously optimistic after Thursday’s sharp decline in major indexes. The Nasdaq Composite and S&P 500 saw losses of 1.8% and 1.2%, respectively, driven by disappointing outlooks from tech giants Meta and Microsoft. Despite both companies exceeding certain earnings expectations, forecasts from their executives triggered after-hours selloffs in their stocks.Tech Giants Drive VolatilityMicrosoft and Meta, two of the most influential stocks in the U.S. market, suffered declines after reporting strong third-quarter earnings but underwhelming forward guidance. Microsoft projected Q4 revenue in the range of $68.1 billion to $69.1 billion, below Wall Street’s anticipated $69.83 billion. The company also indicated slower growth in its cloud computing sector, with a forecasted deceleration despite a robust 33% revenue rise in Q3.Meta similarly exceeded expectations in earnings per share and revenue but warned of higher spending through 2024.
The social media giant raised its capital expenditure estimate for the year to between $38 billion and $40 billion and is preparing for significant increases in AI-related infrastructure spending in 2025.Broad Market Impact and Economic FactorsThe recent tech-driven turbulence was not confined to Big Tech. Companies such as Uber, eBay, and Intercontinental Exchange also posted disappointing results, adding to the market’s cautious sentiment. The broader market downturn was further compounded by economic data pointing to sustained high interest rates, with analysts interpreting this as a sign that elevated borrowing costs could persist.Tom Essaye, the founder of Sevens Report Research, commented that tech stocks’ lacklustre guidance reflects wider concerns about growth prospects and profitability as interest rates remain high.Friday’s Rebound and Investor SentimentFriday’s partial recovery shows that investors are processing both corporate earnings and the economic outlook with a balanced approach, cautiously re-entering the market as they adapt to shifting conditions in the tech sector and beyond. This rebound, analysts suggest, highlights the ongoing sensitivity of the equities market to corporate guidance and macroeconomic indicators as the fourth quarter unfolds.
