Friday, October 25, 2024, a Microsoft store in New York, USA.
Gina Moon | Bloomberg | Getty Images
This report comes from today’s CNBC Daily Open, our international markets newsletter. CNBC Daily Open keeps investors updated on everything they need to know, no matter where they are. Like what you see? You can subscribe here.
What you need to know today
Big tech weighs on market
major U.S. indexes The company’s shares tumbled on Thursday, weighed down heavily by losses in big tech stocks. All three indexes fell this month. Asia-Pacific markets mostly followed Wall Street lower on Friday morning, with Japanese stocks Nikkei 225 Index Shedding is approximately 2.5%. But China’s Shanghai and Shenzhen 300 and Hong Kong’s Hang Seng The index rose on news that China’s factory output grew in October.
Apple and Amazon beat expectations
Apple’s Fourth-quarter profit and revenue topped consensus estimates from London Stock Exchange Group. The Cupertino-based company’s iPhone revenue grew 6%. at the same time, Amazon Third-quarter profit and revenue also beat Wall Street expectations. Although the company’s cloud unit revenue fell short of expectations, it grew faster than the same period last year.
China factory output grows
Factory activity at China’s small manufacturers expanded in October after data showed a contraction in September. The Caixin/S&P Global Manufacturing Purchasing Managers’ Index was 50.3, exceeding the median forecast of 49.7 in a Reuters poll. The index tends to measure private sector companies and exporters compared with official PMI data, which tracks larger state-owned companies.
New contracts for Boeing employees
boeing company and its machinists union have reached a new contract offer that could end a seven-week strike involving more than 32,000 machinists. The new proposal increases salary increases and provides the option of approving bonuses. The vote is scheduled for Monday, with the union urging its members to ratify the contract.
(PRO) Stock Picks from Wealth Managers for the Ultra-Rich
Earlier this year, CNBC Pro spoke with Kevin Teng, CEO of Wrise Private Singapore, a wealth management firm for ultra-high-net-worth clients, to find out which stocks he favors in 2024. Has he changed his mind about the stocks he bet on?
bottom line
Ironically, expectations for big tech companies are so high that exceeding them is no longer enough for them.
take Microsoftone. The company handily beat Wall Street expectations — quarterly revenue topped expectations by $1 billion and net income rose 11% from a year earlier — but its shares fell 6.1% on Thursday. Conservative forecasts for the quarter ending in December disappointed investors and gave Microsoft its worst day since October 26, 2022.
This picture is similar to the one shared Yuan and apple. even letter The stock rose nearly 3% after reporting earnings on Wednesday, after falling 1.9% on Thursday.
“I think we’ve reached a point where there’s not enough enthusiasm and potential for AI,” said Ross Mayfield, investment strategist at Baird Private Wealth Management. “These companies … are not quite delivering on the growth they’re pricing in.”
Losses at these big tech companies weigh heavily on the stock market Nasdaq Indexdown 2.76%. this S&P 500 Indexwhich has a heavy weight on large companies, fell 1.86%. Both indexes had their worst day since September 3. Dow Jones Industrial Average down 0.9%. All indexes posted losses in October.
Still, some analysts remain optimistic about Big Tech’s role as a catalyst for stock market growth.
“Continued growth in AI-related capital expenditures reported by the three major tech giants supports positive structural trends,” said Solita Marcelli. UBS The Chief Information Officer of Global Wealth Management Americas wrote in the report. Maselli was referring to Microsoft, Alphabet and Meta.
Likewise, Piper Sandler Chief market technician Craig Johnson said in a letter to clients that “the overall technical evidence remains constructive with the primary trend higher across the major averages” even if there is “a near-term pullback or modest profit taking.” .
This is the huge burden that big tech companies bear. Investors and analysts don’t just expect these companies to beat expectations. They also expect large companies to drive markets that depend more on growth prospects than profits.
In essence, Big Tech, more than any other industry, needs to meet both past and future expectations.
—CNBC’s Jordan Novet, Jesse Pound, Alex Harring, Hakyung Kim and Brian Evans contributed to this report.
About The Author
