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Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., October 20, 2023.
Brendan Mcdermid | Reuters
Nasdaq 100 futures slipped on Wednesday evening following a sharp selloff in the regular session.
Nasdaq 100 futures dropped 0.8%, while S&P 500 futures fell 0.4%. Futures tied to the Dow Jones Industrial Average were hovering under the flat line.
A slew of corporate earnings came out after the close. Facebook-parent Meta beat on top and bottom lines in the third quarter, but the company's Reality Labs division lost $3.7 billion. Meta shares slid nearly 2%. Meanwhile, Align Technology plummeted 23% after the company offered weak fourth-quarter revenue guidance and missed estimates in the third quarter.
The moves follow a brutal trading session, which was partly driven by a 9.5% decline in Google-parent Alphabet and led its peer tech behemoths lower as well. Alphabet suffered its worst day since March 2020 after revenue in its Google cloud unit came in below analyst estimates.
In regular trading, the S&P 500 fell 1.4% and ended the day below the 4,200 level that's widely watched by chart analysts and investors. That marked the first time the broader index closed below this threshold since May. The tech-heavy Nasdaq Composite, meanwhile, lost 2.4% and recorded its worst day since Feb. 21, while the 30-stock Dow shed 0.3%.
The next market catalyst may come Thursday morning as traders watch the first estimate for third-quarter gross domestic product, which is expected to have gained 4.7% on an annualized basis. The question now is how long will this expected growth last, particularly as economists look for signs of a recession. Weekly jobless claims data will also be out in the morning.
Major earnings are also on the horizon, with Amazon scheduled to post results after the close, along with Ford and Chipotle.
Meta shares fall in after-hours trading, reversing earnings-fueled gains
Shares of Meta dropped 3.1% in post-market trading after the Facebook parent's CFO Susan Li said the company is seeing softer ad spending coming into the fourth quarter.
The stock had initially jumped more than 2% on Meta's earnings report Wednesday, which gave better-than-expected results for the third quarter as revenue increased 23%, the fastest rate of growth since 2021. The company also lowered its fourth-quarter guidance, however, expecting revenue to come out between $36.5 to $40 billion, while analysts surveyed by FactSet expected $38.84 billion.
Li said Meta has observed the softer ad spending correlating with the start of the Middle East conflict, as the Israel-Hamas war enters its third week.
"We've been seeing continued strong advertiser demand in key segments including online commerce and gaming but having said that, we are also seeing more volatility at the start of the quarter," Li said. "That's in part why we widened our guidance range to capture that uncertainty."
The executive noted that although the company cannot attribute demand softness to any geopolitical event with certainty, Meta has historically seen broader demand softness follow other regional conflicts, such as the Russia-Ukraine war.
— Pia Singh, Stephen Desaulniers
English (US)