Tech Stocks Lead Broader Indexes Lower After Alphabet, AMD, Microsoft Report Earnings

Barry Adams
31 Jan, 2024
New York City

Benchmark indexes on Wall Street edged lower, and tech-heavy indexes dropped after leading tech companies reported quarterly results.

The S&P500 index and the Nasdaq Composite dropped more than 0.5% after deciding to sell stocks of Alphabet, Microsoft, AMD, and Starbucks following their quarterly results.

Investors are also looking ahead to the Federal Reserve's rate decisions and monetary policy announcements later in the day.

The Federal Reserve is expected to hold rates steady and reiterate its data-dependent hawkish stance, but investors are looking for clues if and when policymakers may decide to lower rates later in the year.

Most investors are hoping that the Federal Reserve will cut rates by as much as 100 basis points in four rate cuts in the second half of this year.

U.S. Indexes and Yields

The S&P 500 index decreased 0.2% to 4,930.23, and the Nasdaq Composite declined 0.9% to 15,385.62.

The yield on 2-year Treasury notes decreased to 4.31%. 10-year Treasury notes declined to 4.02%, and 30-year Treasury bonds edged down to 4.25%.

WTI crude oil decreased $1.02 to $76.74 a barrel, and natural gas prices increased 2 cents to $2.10 a thermal unit.

Gold increased by $2.09 to $2,037.96 an ounce and extended the previous week's gains after the U.S. dollar drifted slightly lower in international trading.

The dollar index, which weighs the U.S. dollar against a basket of foreign currencies, edged lower to 103.42.

 

U.S. Stock Movers

AMD dropped 6% to $161.65 after the maker of advanced semiconductors offered a weak revenue growth outlook, disappointing some investors.

Microsoft Corp. decreased 0.9% to $404.75 despite the software company reporting higher-than-expected quarterly earnings.

Revenue in the fiscal second quarter ending in December increased 18% to $62.02 billion, net income surged 33% to $21.9 billion from $17.4 billion, and diluted earnings per share advanced to $2.93 from $2.32 a year ago.

Starbucks increased 3.5% to $97.45 after the company reported quarterly results.

North America and U.S. comparable store sales increased 5%, driven by a 4% increase in average ticket sales and a 1% increase in comparable transactions.

The company lowered its full-year revenue outlook because of the competitive environment in its second-largest market, China, and rising tensions between the U.S. and China.

Because of sales weakness in China, the company lowered its fiscal year sales growth to between 7% and 10%, down from the previous estimate of between 10% and 12%.

The company reiterated its full-year earnings per share growth of between 15% and 20%.

Alphabet decreased 5.5% to $144.67 after the parent company of search engine Google reported weaker-than-expected advertising revenue in its latest quarter.

Google search revenue increased to $48 billion from $42.6 billion, and YouTube ads jumped to $9.2 billion from $7.9 billion a year ago but missed market expectations.

Walmart increased 1.1% to $167.45 after the retailer announced a 3-for-1 stock split effective on February 23.

Tesla declined 2.5% to $186.80 after a Delaware judge agreed to void the company's chief executive, Elon Musk's, $56 billion compensation package.

The ruling was delivered on Tuesday after five years of legal wrangling, prompting the judge to note that the pay package must meet rigorous standards because Musk was a controlling shareholder at the time.