Major Averages Fall On Tech Growth Worries, Microsoft Down 7%

Barry Adams
26 Oct, 2022
New York City

Benchmark indexes on Wall Street headed lower and tech weakness and ongoing rate worries. 

Mortgage rates rose above 7% and the European Central Bank is set to lift its key lending rate by a large-size for the second time in a row on Thursday. 

The Federal Reserve is also widely expected to lift its key lending rate by 75 basis points at the end of the 2-day meeting on November 2. 

Tech stocks led the decliners after Google reported weak sales growth and first quarterly ad sales decline for its YouTube platform. 

Microsoft also cited weaknesses in its cloud business and ad sales slowdown in its search business.  

 

Mortgage Rate Above 7%

Mortgage rates crossed 7% and increased for the 1-th week in a row, according to the data from the Mortgage Bankers Association. 

The 30-year fixed-rate mortgage on balances less than $647,200 rose 22 basis points to 7.1% in the week ending on October 21, 2022. 

Rates have jumped from 3% a year ago and have been rising following the rise in Treasury yields. 

Crude oil rose $1.08 to $86.38 a barrel and natural gas edged down 21 cents to $5.39 a thermal unit. 

The yield on 2-year Treasury notes eased to 4.46%, on 10-year notes dropped to 4.06% and 30-year bonds fell to 4.19%. 

 

Stock Movers 

Alphabet Inc declined 6% to $98.74 in after hours trading and the search engine operator said revenue in the third quarter increased 6% to $69.1 billion from $65.1 billion a year ago. 

Net income in the period fell to $13.9 billion from $18.9 billion and diluted earnings per share dropped to $1.06 from $1.40 a year ago. 

Alphabet's sales growth slowed sharply to 6% from 41% a year ago, highlighting pullback in corporate advertising from providers of financial services, mortgage and loans and insurance and crypto industry. 

Boeing Company declined 1.1% to $145.10 despite the aerospace company reporting unexpected quarterly loss on issues linked to its Airforce One tanker program in addition to ongoing commercial plane production challenges. 

Chipotle Mexican Grill, Inc jumped more than 4% in after hours trading after the fast-food restaurant chain  operator said revenue in the third quarter increased 13.7% to $2.2 billion and comparable restaurant sales increased 7.6%. 

Net income in the third quarter was $257.1 million or $9.20 a diluted share compared to $204.4 million or $7.18 a diluted share a year ago. 

Hilton Worldwide gained 2.2% to $1.30.64 after the company posted better-than-expected earnings and raised its estimate for full-year earnings on the sustained rise in travel demand. 

Microsoft Corporation declined 6.5% to $232.72 after the company said revenue in fiscal first quarter ending in September increased 11% to $50.1 billion and net income decreased 14% to $17.6 billion from a year ago. 

Quarterly sales rose at the slowest pace in five years. 

Diluted earnings per share declined 13% to $2.35 from a year ago. 

The stock declined sharply after the company cited weakness in its cloud business and earnings were ahead of expectations but growth slowed to the slowest pace in five years. 

Search and news advertising sales growth declined to 16% from 40% a year ago and sales have growing at a slower pace every quarter in a row for a year, reflecting general weakness in online advertising. 

Qualtrics International increased 0.3% to $11.40 after the company said revenue in the third quarter increased 39% to $377.5 million from $271.6 million a year ago. 

Net loss in the quarter shrank to $233.5 million from $286 million and diluted loss per share fell to 40 cents from 56 cents a year ago. 

The company guided fourth quarter revenue in the range between $380 million and $382 million and subscription revenue between $323 million and $325 million. 

Texas Instruments dropped 5% to $153.50 after the chipmaker posted third quarter revenue increased 13% to $5.2 billion from $4.64 billion a year ago.

Net income increased 18% to $2.3 billion from $1.95 billion and diluted earnings per share rose to $2.47 from $2.07 a year ago. 

The company guided fourth quarter revenue in the range of $4.40 billion to $4.80 billion and earnings per share between $1.83 and $2.11.

Visa Inc increased 1% to $196.63 after the payment processing network operator reported September quarter revenues increased 19% to $7.8 billion. 

Net income rose 10% to $3.9 billion and diluted earnings per share increased 13% to $1.86. 

Payment volume in the quarter increased 10% and processed transactions rose 12% from a year ago.