US STOCKS-S&P 500, Nasdaq end lower but the Dow jumps as earnings bifurcate
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Caterpillar, McDonald's gain on earnings beats
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U.S. economic growth rebounds in Q3
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Meta plunges on weak holiday-quarter forecast
(Updates to market close)
By Stephen Culp
NEW YORK, Oct 27 (Reuters) -
The S&P 500 and the Nasdaq posted losses on Thursday, as investors juggled solid economic data and a mixed spate of corporate earnings.
The price-weighted Dow advanced, held aloft by industrials, while weakness in market-moving tech and tech-adjacent megacaps depressed the S&P 500 and Nasdaq in the wake of downbeat quarterly results and dour guidance.
"It’s very much a bifurcated market, a tale of two cities," said Tim Ghriskey, senior portfolio strategist Ingalls & Snyder in New York.
"There's lot of pressure on tech and tech-plus names, higher growth names," Ghriskey added. "On the flipside you’re seeing a lot of strength in other sectors, in particular consumer staples, energy, financials, industrials and utilities."
Meta Platforms plunged after the Facebook parent followed the trend set by Microsoft Corp and Alphabet Inc by providing gloomy forward guidance.
But heavy equipment maker Caterpillar Inc reported better-than-expected quarterly profit, sending its shares jumping.
A third-quarter GDP reading showing the U.S. economy returned to growth in the July-Sept period, along with steady quarterly core inflation helped take the sting out of earnings.
Investors continue to scan the economic horizon for evidence that the barrage of aggressive interest rate hikes from the Federal Reserve, begun in March, are beginning to have the desired effect by cooling down the economy.
While a 75 basis point rate hike at the conclusion of its Nov. 1-2 policy meeting is all but assured, the likelihood of a smaller, 50 basis point hike in December was about 55%, according to CME's FedWatch tool.
"The overriding theme is really the Fed. The Fed is going to control the direction of this market over the coming months," Ghriskey added.
According to preliminary data, the S&P 500 lost 21.73 points, or 0.57%, to end at 3,808.87 points, while the Nasdaq Composite lost 180.84 points, or 1.65%, to 10,790.16. The Dow Jones Industrial Average rose 207.61 points, or 0.65%, to 32,046.72.
Third-quarter reporting season forges ahead at full speed, with 227 of the companies in the S&P 500 having reported. Of those, 74% have beaten consensus estimates.
Analysts now see aggregate S&P earnings growth of 2.5%, down from 4.5% at the beginning of October.
"In general we’ve seen earnings come in at or slightly above expectations," Ghriskey said. "But those expectations have been lowered throughout the quarter."
McDonalds Corp advanced after the fast food chain beat quarterly same-store sales estimates.
Southwest Airlines Co quarterly profit topped consensus estimates, sending the carrier's stock higher.
Amazon.com and Apple Inc are due to report shortly.
(Reporting by Stephen Culp; Additional reporting by Amruta Khandekar and Shreyashi Sanyal in Bengaluru; Editing by Cynthia Osterman)
