Wall Street Reviews Mega-Cap Tech Earnings, Fourth Quarter GDP Growth Slowest In Three Quarters

Barry Adams
30 Jan, 2025
New York City

Wall Street indexes lacked direction in Thursday's trading, and investors turned cautious a day after the Federal Reserve poured cold water over imminent rate cut expectations, citing elevated inflation.

The S&P 500 index decreased 0.2%, and the Nasdaq Composite declined 0.4%, and investors reviewed a slew of corporate results, including updates from Microsoft, Meta, Tesla, and IBM.

Investor sentiment has been on the defensive after the emergence of cheaper chatbot from a Chinese startup raised worries about the need for expensive computer servers using advanced chips made by American companies.

Moreover, market sentiment wavered after the GDP growth in the fourth quarter slowed to an annual pace of 2.3%, the U.S. Bureau of Economic Analysis reported Thursday in its flash estimate.

The U.S. economy expanded at the slowest pace in three quarters and slowed from 3.1% in the third quarter, according to the preliminary estimate released by the government agency.

The Federal Reserve left the fed funds rate range unrevised between 4.25% and 4.50% and halted its rate-cutting cycle after trimming in the previous three meetings. 

Policymakers are likely to hold rates steady at the end of the next meeting on March 19, until a solid evidence emerges of sustained decline in inflation. 

While the Fed's tough talk on inflation garners headlines, interest rates have been far from restrictive for more than a year, and inflation in the service sector and core inflation have been significantly higher than the target rate of 2% and showing no sign of easing for more than nine months.

 

U.S. Indexes and Treasury Yields

The S&P 500 index increased 0.3% to 6,057.51, the Nasdaq Composite edged up 0.2% to 19,669.37, and the Russell 2000 index was down 0.3% to 2,283.10.

The yield on 2-year Treasury notes edged lower to 4.21%, 10-year Treasury notes dropped to 4.50%, and 30-year Treasury bonds eased to 4.74%.

WTI crude oil decreased $0.12 to $72.52 a barrel, and natural gas prices edged higher by $0.02 to $3.19 a thermal unit.

Gold rose by $21.62 to 2,781.76 an ounce, and silver edged up by $0.35 to $31.21.

The dollar index, which weighs the US currency against a basket of foreign currencies, dropped 0.03 to 107.98 and traded at a two-year high.

 

U.S. Stock Movers

Microsoft Corp dropped 4.6% to $421.85 despite the company posting strong results for its fiscal 2025 second quarter ending in December, helped by a 21% increase in cloud service sales.

However, the software company's revenue outlook in the current quarter disappointed some investors. 

Meta Platforms Inc surged 2.3% to $692 after the parent company of Facebook, Instagram, and WhatsApp posted strong earnings for the fourth quarter ending in December.

Tesla gained 3% to $400.86 after the electric vehicle maker posted mixed earnings in the fourth quarter ending in December.

IBM soared 9.4% to $250.29 after the legacy technology company reported fourth-quarter results that surpassed market expectations. 

The company said its software business expanded by double digits in the second half, and the generative artificial intelligence business order book increased by $2 billion to $5 billion. 

UPS plunged 14.2% to $114.72 after the parcel delivery company said it reached a deal with Amazon, its largest customer, to lower shipment volume by 50% by the second half of 2026. 

UPS was under pressure after the company reported better-than-expected earnings, but revenue fell short of market expectations in the fourth quarter.