The S&P 500 slipped 0.5% on Thursday as earnings from Alphabet and Caterpillar dragged both stocks down by 10% or more. The Fed held rates a day earlier, and the PCE price index showed inflation accelerating in September.
The S&P 500 slipped 0.5% on Thursday and was on pace to snap a three-day winning streak, weighed by corporate earnings. The Nasdaq Composite shed 1.4%, while the Dow Jones Industrial Average lost 296 points, or 0.6%.
Alphabet and Caterpillar lead the declines
Alphabet lost 12% after it missed expectations on adjusted earnings per share and revenue in the third quarter. The Google parent posted negative free cash flow of $9.07 billion and kept its full-year capital expenditures forecast at $195 billion to $205 billion.
Caterpillar shares slid 10%, even though the industrial giant reported better-than-expected third-quarter revenue and earnings. Sales for its construction industries business came in slightly below estimates.
Microsoft was little changed despite beats on the top and bottom lines in its fiscal first quarter, per LSEG. Neoclouds fell as Microsoft's lower-than-expected capital expenditures figure pointed to infrastructure partners taking longer to deliver data center capacity.
Fed holds rates as inflation accelerates
On Wednesday, the Federal Reserve held rates steady in a range between 3.75% and 4%. The Federal Open Market Committee had issued a quarter-percentage-point hike in September.
Policymakers said inflation remained elevated while they awaited more information before taking further steps. The personal consumption expenditures price index then showed price increases accelerated in September, with the monthly figure in line with expectations and the annual rate just below.
Daniel Siluk of Janus Henderson Investors read the decision as patience rather than a shift away from a tightening bias. He said "The door remains open to further tightening".
Economy grows faster than expected
The U.S. economy grew 3.4% in the third quarter, topping a Dow Jones consensus estimate of 3.1%. The PCE price index rose 0.5% in September, which put annual inflation at 3.6%.
Source: CNBC
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