Key Takeaways
- US stock indexes experienced a downturn on Thursday, influenced by mixed earnings reports from major technology companies and concerns over interest rate policies.
- Disappointing results from Meta Platforms and Microsoft contrasted with positive earnings from Alphabet, adding to market volatility.
- Federal Reserve Chair Powell’s remarks signaled caution against assuming further December rate cuts, contributing to rising Treasury yields and pressuring stocks.
- A trade agreement between the US and China offered some market support, but ongoing uncertainty regarding tariffs and a US government shutdown continued to weigh on sentiment.
- Notable stock movements included significant drops for Meta Platforms, FMC Corp, Sprouts Farmers Market, and Chipotle Mexican Grill, while Alphabet, Guardant Health, and C.H. Robinson Worldwide saw gains.
Market Performance Overview
US stock markets closed lower on Thursday, with the S&P 500 Index ($SPX) falling 0.99%, the Dow Jones Industrials Index ($DOWI) declining 0.23%, and the Nasdaq 100 Index ($IUXX) dropping 1.47%. December E-mini S&P futures (ESZ25) were down 0.95%, and December E-mini Nasdaq futures (NQZ25) decreased by 1.37%.
The broader market faced pressure from divergent earnings results among megacap technology companies. Meta Platforms (META) saw a decline of over 11%, and Microsoft (MSFT) dropped more than 2% after failing to meet high expectations. Conversely, Alphabet (GOOGL) rose over 2% by beating its Q3 earnings estimates.
Interest Rate Uncertainty and Treasury Yields
Stocks also experienced negative sentiment carried over from Wednesday, when Federal Reserve Chair Powell cautioned against assuming the Fed would cut interest rates again in December. This uncertainty contributed to the 10-year T-note yield climbing to a 2.5-week high of 4.11% on Thursday, which in turn pressured stock prices.
💡 The markets are currently pricing in a 72% probability of another 25 basis point rate cut at the upcoming FOMC meeting on December 9-10. Additionally, markets are anticipating an overall reduction of 82 basis points in interest rates by the end of 2026, bringing the effective federal funds rate down to 3.06% from the current 3.88%.
The December 10-year T-notes (ZNZ5) closed down 6.5 ticks on Thursday, with the 10-year T-note yield rising 1.9 basis points to 4.095%. T-note prices extended their slide from Wednesday to a 2.5-week low, and the 10-year T-note yield reached a 2.5-week high of 4.114%. Safe-haven demand for T-notes decreased following the agreement between Presidents Trump and Xi Jinping to extend a tariff truce. Rising inflation expectations are also bearish for T-notes, as the 10-year breakeven inflation rate hit a two-week high of 2.312% on Thursday. Further pressure came from Fed Chair Powell’s statement on Wednesday that a further reduction in the policy rate at the December FOMC meeting is not a certainty.
📊 T-note prices are receiving some support from the ongoing US government shutdown, which could lead to increased job losses, reduced consumer spending, and a weakened US economy, potentially creating conditions for the Fed to continue cutting interest rates.
Overseas, European government bond yields also moved higher on Thursday. The 10-year German bund yield climbed to a 2.5-week high of 2.661%, closing up 2.2 basis points at 2.643%. The 10-year UK gilt yield rose 3.2 basis points to 4.424%.
📌 Eurozone Q3 GDP data showed a +0.2% increase quarter-over-quarter and a +1.3% rise year-over-year, surpassing expectations of +0.1% and +1.2%, respectively. The Eurozone’s October economic sentiment indicator improved by 1.2 points to a 2.5-year high of 96.8, exceeding the anticipated 96.0.
⚡ German October CPI (EU harmonized) rose by 0.3% month-over-month and 2.3% year-over-year, also better than the expected 0.2% and 2.2%, respectively. As anticipated, the European Central Bank (ECB) maintained its deposit facility rate at 2.00%.
ECB President Lagarde noted that the EU trade deal with the US, the ceasefire in the Middle East, and progress in China-US relations have mitigated downside risks to growth. Current market pricing from swaps indicates a 5% chance of a 25 basis point rate cut by the ECB at its next policy meeting on December 18.
US Stock Movers and Key Earnings Events
Weakness in several of the Magnificent Seven technology stocks contributed to the broader market’s decline. Meta Platforms (META) closed down over 11%, and Tesla (TSLA) fell more than 4%. Amazon.com (AMZN) was down over 3%, while Microsoft (MSFT) and Nvidia (NVDA) each closed down more than 2%.
📍 Meta Platforms (META) led the losses in the Nasdaq 100, dropping over 11%. This decline followed an increase in its full-year total expense forecast to $116-$118 billion, up from a previous range of $114-$118 billion, with the new midpoint exceeding the consensus estimate of $115.63 billion.
FMC Corp (FMC) experienced a significant drop of over 45% after revising its full-year adjusted EPS forecast downward to $2.92-$3.14, from a prior expectation of $3.26-$3.70, falling well short of the consensus estimate of $3.47.
Sprouts Farmers Market (SFM) closed down over 26% after reporting Q3 net sales of $2.20 billion, below the consensus of $2.23 billion. The company also lowered its full-year comparable sales forecast to a growth of 7%, down from its previous view of 7.5% to 9%, and below the consensus estimate of 8.44%.
🔗 Chipotle Mexican Grill (CMG) was among the biggest losers in the S&P 500, down over 18%. This followed the company lowering its full-year sales forecast for the third time this year, reducing its comparable restaurant sales projection to a low single-digit decline from a previous forecast of flat.
Cigna Group (CI) fell by more than 17% after executives indicated during an earnings call that margin pressure is expected in the company’s pharmacy benefits unit over the next two years.
eBay (EBAY) closed down over 15% after forecasting full-year adjusted EPS from continuing operations between $5.42 and $5.47, with the midpoint below the consensus estimate of $5.46.
International Paper (IP) finished trading down over 12% after reporting third-quarter net sales of $6.22 billion, which was below the consensus estimate of $6.54 billion.
Boeing (BA) led the decliners in the Dow Jones Industrials, closing down over 6%. This occurred after Deutsche Bank downgraded the stock to hold from buy, citing that the company’s finances are constrained by the burdens of the past.
Microsoft (MSFT) closed down over 2%, despite reporting better-than-expected Q1 earnings. CFO Hood noted that demand for its Azure cloud services is significantly ahead of the capacity we have available.
On the positive side, Alphabet (GOOGL) closed up more than 3% after reporting Q3 revenue ex-TAC of $87.47 billion, which exceeded the consensus estimate of $85.11 billion.
Guardant Health (GH) surged over 28% after boosting its full-year revenue forecast to $965 million-$970 million, up from a previous estimate of $915 million-$925 million, significantly surpassing the consensus of $922 million.
Metsera (MTSR) jumped over 23% following Novo Nordisk’s offer to acquire the company for nearly $6.5 billion, or $56.50 per share, with potential additional payments bringing the total up to $77.75 per share if certain targets are met.
C.H. Robinson Worldwide (CHRW) led S&P 500 gainers, closing up over 19%. The company reported Q3 adjusted EPS of $1.40, exceeding the consensus of $1.30, and announced a $2 billion share repurchase program.
AMETEK Inc. (AME) closed up more than 7% after reporting Q3 net sales of $1.89 billion, better than the consensus estimate of $1.81 billion.
Huntington Ingalls Industries (HII) rose over 6% after reporting Q3 revenue of $3.20 billion, stronger than the consensus figure of $2.95 billion.
Align Technology (ALGN) finished trading up more than 5% after reporting Q3 net revenue of $995.7 million, exceeding the consensus estimate of $976 million.
Eli Lilly & Co. (LLY) closed up more than 4% after raising its full-year revenue forecast to $63.0 billion-$63.5 billion, from a previous estimate of $60.0 billion-$62.0 billion.
Upcoming Earnings Reports
Companies scheduled to report earnings on October 31, 2025, include AbbVie Inc (ABBV), AGCO Corp (AGCO), Aon PLC (AON), Carlyle Group Inc/The (CG), Cboe Global Markets Inc (CBOE), Charter Communications Inc (CHTR), Chevron Corp (CVX), Church & Dwight Co Inc (CHD), Colgate-Palmolive Co (CL), Dominion Energy Inc (D), Exxon Mobil Corp (XOM), Federal Realty Investment Trust (FRT), Lear Corp (LEA), Linde PLC (LIN), LyondellBasell Industries NV (LYB), Madison Square Garden Sports Corp (MSGS), Middleby Corp/The (MIDD), Newell Brands Inc (NWL), nVent Electric PLC (NVT), OneMain Holdings Inc (OMF), Organon & Co (OGN), RBC Bearings Inc (RBC), T Rowe Price Group Inc (TROW), and WW Grainger Inc (GWW).
Summary and Outlook
Thursday’s market activity reflected a complex interplay of corporate earnings, monetary policy signals, and geopolitical developments. Investors are closely monitoring the upcoming earnings reports from major companies like Apple and Amazon, as well as the ongoing US government shutdown and trade relations between the US and China.
The Federal Reserve’s future interest rate decisions remain a significant focus, with markets attempting to price in the likelihood of further rate cuts. Shifting economic data from both the US and Europe will continue to influence these expectations and overall market sentiment.