U.S. stocks extended a volatile trading streak on Thursday as third-quarter corporate financial results continued to climb amid lingering growth concerns on Wall Street.
The S&P 500 (^GSPC) accelerated losses to fall 1% in afternoon trading, while the Dow Jones Industrial Average (^DJI) lost about 130 points, or 0.4%. The tech-heavy Nasdaq Composite (^IXIC) fell 0.8%. Meanwhile, Treasury yields hit new multi-year highs, with the rate-sensitive 2-year note above 4.6% for the first time since 2007 and the 10-year well above 4.1%, a level last observed in 2008.
The UK again caught the eye of US investors on Thursday morning with the resignation of Prime Minister Liz Truss after her administration presented a failed economic plan that included plans for tax cuts that rattled financial markets. The pound strengthened and UK bonds rose after news that Truss will step down by the end of next week.
In the United States, the Labor Department reported an unexpected drop in the number of Americans filing for unemployment insurance for the week ended October 15. Claims fell to 214,000 from a revised 226,000 last week, a sign that the labor market remains tight despite efforts to rein in the economy to rein in inflation. Economists polled by Bloomberg forecast a total of 230,000 claims.
“The drop in initial jobless claims supports our view that the increases over the past two weeks were noise rather than a signal, triggered by seasonal adjustment issues,” the chief economist said. of Pantheon Macroeconomics, Ian Shepherdson, in a note. “Also note that low claims numbers are no guarantee of strong payrolls; when demand first weakens, companies reduce gross new hires before they start laying off existing staff.”
Mike Loewengart, head of model portfolio construction at Morgan Stanley’s Global Investment Office, also noted that the figure might not be enough to distract investors from earnings, but strong jobs data and readings. High inflation rates in the coming weeks will raise projections for a 75-basis point rate hike to end the year.
“Earnings season is in full swing, so investors are analyzing with an extra eye on forecasts and expecting volatility to remain elevated,” Loewengart said in an emailed comment.
On that note, AT&T Inc. (T) and American Airlines (AAL) were the latest names to report better-than-expected third-quarter results from analysts.
Telecommunications giant AT&T on Thursday released numbers that beat sales and profit forecasts and raised its profit forecast, also revealing 964,000 new subscribers and affirming confidence to deliver previously estimated cash flow for the rest of the year. ‘year. Shares gained nearly 8% on Thursday afternoon.
And American Airlines Group said Thursday that travel demand remained robust despite higher airfares as it raised its profit forecast for the current quarter. The stock erased morning gains to fall more than 3% in the second half of the trading day.
Shares of Tesla (TSLA), meanwhile, fell about 7% after the electric vehicle maker released results on Tuesday night that disappointed Wall Street, beating earnings-per-share estimates but falling short of expectations. quarterly revenue expectations.
The company reiterated its previous forecast of a 50% CAGR in vehicle deliveries for the year, although it admitted headwinds from rising raw material costs and inefficiencies in its Gigafactory Berlin.
“I can’t stress enough that we have excellent demand for the fourth quarter and we plan to sell every car we make as far as we can see,” Chief Executive Elon Musk said, adding: “The “North America is in pretty good shape, even if the Fed raises interest rates more than it should, but I think they will eventually realize that and lower them again.
![German Chancellor Olaf Scholz, Prime Minister of Brandenburg Dietmar Woidke and Elon Musk attend the opening ceremony of the new Tesla Gigafactory for electric cars in Gruenheide, Germany March 22, 2022. Patrick Pleul/Pool via REUTERS](https://oponame.com/wp-content/uploads/2022/10/Live-Stock-Market-News-Updates-Stocks-Fall-as-Earnings-Rise.jpeg)
Federal Reserve Bank of St. Louis President James Bullard said in a Bloomberg TV interview on Wednesday that he expects policymakers to end the “frontloading” of sharp interest rate hikes. interest by early next year and move into smaller moves if necessary until inflation subsides. .
His Pennsylvania colleague, Philadelphia Fed President Patrick Harker, also said in separate comments on Thursday that the central bank may put the tightening process on hold next year, but took a more assertive tone on rising prices. short-term rates to fight inflation.
The Fed’s Beige Book, a publication of economic assessments across the US central bank’s 12 districts, showed that businesses remained largely resilient in the macroeconomic phase of higher rates and policy tightening thanks to strong power. price fixing. But some have expressed difficulty with consumer pushback in the face of rising prices and inflation that has continued to drive up wages.
Corporate earnings have so far reflected resilience, but Wall Street strategists have widely warned earnings-per-share forecasts will continue to slide.
“We are becoming skeptical this quarter will bring enough corporate earnings capitulation to next year’s numbers for the final lows of this bear market to occur now,” said Morgan Stanley chief equity strategist Mike Wilson. , earlier this week in a podcast. “Final lows for this bear are likely to be closer to 3000-3200 as companies capitulate and guide 2023 guidance lower during the Q4 earnings season in January and February.”
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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