US Equities Rebound After Tech Stock Selloff

According to Blockworks, US equities opened higher on Friday morning, recovering some of the losses from Thursday when the Nasdaq Composite and S&P 500 indexes fell by 1.8% and 1.2%, respectively. The selloff was primarily driven by disappointing outlooks from tech giants Meta and Microsoft, despite both companies surpassing expectations on certain earnings metrics. Analysts noted that the share prices of Microsoft and Meta dropped by 4% and 3%, respectively, during after-hours trading due to their projections falling short of expectations. Microsoft executives forecasted Q4 revenue between $68.1 billion and $69.1 billion, below Wall Street's estimate of $69.83 billion. The company also anticipates a slowdown in its cloud computing platform, which had seen a 33% increase in revenue during Q3. Meta, on the other hand, reported higher earnings per share and revenue for the third quarter but indicated that its spending would continue to rise through the end of 2024. The company expects capital expenditures for the year to be between $38 billion and $40 billion, an increase from the previous quarter's estimate. Additionally, Meta is projecting a significant increase in AI-related infrastructure expenses in 2025. Tom Essaye, founder of Sevens Report Research, commented that the disappointing earnings were not limited to Big Tech. Companies like Uber, Ebay, and Intercontinental Exchange also reported underwhelming results. Furthermore, economic data suggests that higher interest rates may persist for a longer period. This combination of factors contributed to the market's performance on Thursday. The rebound on Friday indicates a partial recovery as investors digest the latest earnings reports and economic indicators.