US and European stocks fall as Big Tech sales figures disappoint

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Wall Street shares fell on Friday, echoing losses in Europe, after disappointing results from Apple and Amazon reignited questions about labor shortages, supply cuts and, therefore, the persistence of high inflation.

The blue-chip S&P 500 index slipped 0.3% late in the morning, while the tech-rich Nasdaq Composite was flat after losing 0.5% at the opening.

The measures came after Apple and Amazon failed to meet analysts’ expectations on Thursday. In a earnings report released after the closing bell, Apple reported revenue of $ 83.4 billion for the fiscal quarter ending in September, up 29% but slightly lower than consensus estimates, the constraints of supply that hampered growth. Net profits for the iPhone maker have beaten expectations.

Meanwhile, Amazon warned that labor issues and rising costs would hold back profits for the remainder of the year, as it posted third-quarter revenue of $ 111 billion – lower than the $ 112 billion forecast by analysts.

US stocks had closed at record highs in the previous session, helped by a series of strong earnings updates from large companies, including machinery group Caterpillar, which is seen as an economic indicator, as well as numbers positive earlier in the week from Microsoft and Alphabet. Microsoft overtook rivals in Silicon Valley on Friday to become the world’s largest company.

But new figures showed U.S. consumer spending slowed in September, with 0.6 percent growth marking a slowdown from 1 percent in August. At the same time, the core personal consumption expenditure (PCE) price index – a measure of inflation – rose 3.6% in September year-on-year, broadly in line with projections.

The Stoxx Europe 600 stock index edged down 0.1% in afternoon trades as new data showed annual inflation for the eurozone hit 4.1% in October. This marked an increase from 3.4% in September and topped consensus forecast by 3.7%, according to a Refinitiv poll.

These inflation data were released with figures showing that the eurozone economy grew by 2.2% in the three months to September, compared to the previous quarter, more than estimates of 2%. .

Government bond markets were choppy after significant volatility on Thursday afternoon following the European Central Bank meeting.

The two-year German Bund yield rose 0.05 percentage point to minus 0.58% on Friday, with investors betting the ECB would hike rates next year. Italian ten-year bond yields rose 0.16 percentage points to 1.15 percent, taking the rise over the past two days to 0.25 percentage points. This is the largest sale of the country’s benchmark bond since the national Covid-19 crisis in spring 2020.

The moves came after ECB chief Christine Lagarde attempted to push market prices back for a rate hike from all-time lows next year.

Investors have also focused on other global central banks who should act sooner to reduce their stimulus measures. The Reserve Bank of Australia has chosen not to defend its bond yield target, which is at the heart of its quantitative easing program. The move pushed the April 2024 Australian government bond yield to over 0.7%, well above the bank’s target of around 0.1%.

Interest rate decision announcements are expected next Tuesday, Wednesday and Thursday from the RBA, US Federal Reserve and Bank of England respectively.

“The part of the yield curve that really values ​​rate hikes is the initial part up to five years,” said Alessio de Longis, head of global tactical asset allocation at Invesco. “The market is basically saying central banks need to raise interest rates.”

Ultimately, the way the yield curve behaved showed that “the market is anticipating a return to the low growth, low inflation world that we experienced afterwards. [global financial crisis]added on Longis.

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