Stocks ended sharply lower on Thursday, after weak earnings from Whole Foods and Qualcomm dragged down the S&P 500 and Nasdaq. However, Twitter made an impressive debut on the bourses yesterday. Meanwhile, a number of government reports were published yesterday. These reports along with Friday’s much awaited job’s numbers will give investors some insight into how long the Fed will continue with its stimulus program. All the sectors in the S&P 500 industry groups ended in the red, led by consumer discretionary stocks. The S&P 500 index dropped the most since August.
For a look at the issues currently facing the markets, make sure to read today’s Ahead of Wall Street article
The Dow Jones Industrial Average (DJI) declined 1% to close the day at 15,593.98. The S&P 500 fell 1.3% to finish yesterday’s trading session at 1,747.15. The tech-laden Nasdaq Composite Index dropped 1.9% to end at 3,857.33. The fear-gauge CBOE Volatility Index (VIX) surged 9.8% to settle at 13.91. Consolidated volumes on the New York Stock Exchange were 4.16 billion shares. Declining stocks outnumbered the advancers. For 76% shares that declined, only 22% advanced.
Twitter Inc. (NYSE:TWTR) made its debut on Thursday. Share prices of Twitter rose 77% to $45.98 from its $26 initial public offering (IPO) price set on Wednesday. Prices had increased to more than $50 during the trading day. Eventually, Twitter ended the trading day at $44.9 per share, lower than its opening price but 73% higher than its IPO price.
European equities ended flat yesterday, despite rallying in the early stages, after the European Central Bank (ECB) cut its primary interest rate to 0.25% from 0.50%. The FTSEurofirst 300 Index, which represents the broader European market, closed the end of the day without overall losses or gains. European shares dropped further later during the day.
In earnings news, shares of Qualcomm dropped 3.8% to $67.09, which ended up as one of the biggest laggards on both the S&P 500 and the Nasdaq. Whole Food’s disappointing results dragged its shares down over 11%, Moreover, Tesla Motors Inc. (NASDAQ:TSLA) shares continued the slide and dropped 5.8% yesterday after a third Model S vehicle reportedly caught fire on Wednesday. This development comes shortly after the company announcing disappointing third quarter results.
Meanwhile, the GDP report showed that the U.S. economy displayed growth of 2.8% in the third quarter. This was significantly higher than consensus estimate of 2%. It was also appreciably more than the figure of 2.5% recorded in the second quarter. The primary factors behind the increase are a higher level of business inventory investment, a hike in government spending and a reduction in imports.
The Board of Governors of the Federal Reserve System reported that consumer credit increased by $13.7 billion in September from previous month’s figure of $14.2 billion. This was above the consensus estimate of $12 billion. Nonrevolving credit increased at an annual rate of 8%. However, revolving credit declined at annual rate of 2.3%. In September, consumer credit increased at a seasonally adjusted annual rate of 5.5%.
Additionally, the U.S. Department of Labor reported that initial claims had decreased by 9,000 to 336,000 in the week ending November 2 from previous week’s figure of 345,000. However, jobless claims numbers were higher than the consensus estimate of 335,000.
The Bloomberg consumer index dropped for the sixth week to 37.9. The index also reached its lowest level in a year. The buying-climate measure dropped to negative 42, a five month low. The gauge of personal finances was down to negative 4.9, the worst since December.
The consumer discretionary sector was the worst performer among the S&P 500 industry groups. The Consumer Discretionary SPDR (XLY) lost 2.1%. Stocks such as Amazon.com, Inc. (NASDAQ:AMZN), Comcast Corporation (NASDAQ:CMCSA), The Walt Disney Company (NYSE:DIS), The Home Depot, Inc. (NYSE:HD), and McDonald’s Corporation (NYSE:MCD) slipped 3.5%, 1.2%, 2.7%, 0.9%, 0.7%, respectively.