The U. S. stock market faced downward pressure on Thursday, driven by disappointing corporate earnings reports from major companies. The Nasdaq Composite dropped 1.4%, the S&P 500 fell 0.5%, and the Dow Jones Industrial Average declined by 296 points, or 0.6%, marking a potential end to a three-day winning streak.
Alphabet, the parent company of Google, saw its shares plummet 12% after failing to meet third-quarter expectations for adjusted earnings per share and revenue. The company reported negative free cash flow of $9.07 billion, yet maintained its full-year capital expenditures forecast between $195 billion and $205 billion.
Caterpillar also experienced a significant drop, with shares falling 9%. Despite reporting better-than-expected overall revenue and earnings, the industrial giant's construction industries business sales slightly missed estimates.
In contrast, Microsoft remained relatively stable. The tech giant's Azure cloud infrastructure business growth contributed to surpassing expectations in both revenue and earnings for the fiscal first quarter. However, a lower-than-expected capital expenditures figure suggested delays in data center capacity delivery by infrastructure partners.
The focus on artificial intelligence stocks continues, with the iShares Semiconductor ETF (SOXX) and the Roundhill Memory ETF (DRAM) experiencing declines of over 2% and 3%, respectively, after a recent uptick. The Federal Reserve's decision on Wednesday to maintain the current interest rate range between 3.75% and 4% was anticipated, following a quarter-percentage-point hike in September. Policymakers noted that inflation remains elevated but chose to wait for more data before making further adjustments.
Meanwhile, the U. S. economy showed resilience, growing by 3.4% in the third quarter, surpassing the Dow Jones consensus estimate of 3.1%. This growth occurred despite an acceleration in inflation, with the personal consumption expenditures price index rising 0.5% in September, leading to an annual inflation rate of 3.6%.
Other notable stock movements included Chipotle Mexican Grill, which reported mixed quarterly results, with in-line revenue and a slight miss on earnings per share, but continued its growth trajectory with plans to open 340 to 360 new locations by 2027.
In Europe, Airbus shares rose by as much as 2.3% after posting a mixed quarter. The aircraft manufacturer missed sales expectations but exceeded profit forecasts, reporting revenue of 17.5 billion euros and adjusted earnings before interest and tax of just under 1.8 billion euros. Despite challenges such as supply chain constraints and engine shortages, Airbus reaffirmed its target of delivering 870 aircraft this year.
In the energy sector, Shell saw its shares rise 3% to an all-time high after reporting a near doubling of profits in the third quarter, driven by record refining margins and elevated commodity prices. The company announced an increase in its quarterly share buyback program to $5 billion.
Conversely, Volkswagen reported a significant loss of nearly $6.6 billion in the third quarter, attributed to challenges in the Chinese market and U. S. tariff costs. The automaker posted an operating loss of nearly 5.9 billion euros, with sales revenue dropping 6.3% to 75.3 billion euros. Volkswagen's restructuring efforts continue, with plans to cut 100,000 jobs, as it aims for group sales revenue of around 315 billion euros by 2026.
Finally, Carlsberg reported a decline in beer sales as consumers across all generations moderated their alcohol consumption. The Danish brewer's CEO highlighted this trend as a factor affecting sales performance.
