The aBP Weekly: The Economy Accelerated, but Tech Stocks Sold Off
Updated: 23 hours ago
Summary
Wall Street ended October under pressure as technology stocks experienced another difficult week. The Nasdaq Composite declined 2.0%, while the S&P 500 fell 0.6% and the Dow Jones Industrial Average lost 0.9%. The Russell 2000 gained 1.3%, highlighting the uneven nature of the selloff.
The U.S. economy accelerated in Q3. Real GDP increased at an annualized rate of 3.4%, compared with 2.2% in Q2, supported by stronger investment and consumer spending. However, the Federal Reserve maintained interest rates at 3.75% to 4.00% as inflation remained elevated.
Big Tech earnings exposed growing concerns about AI investment returns. Microsoft reported strong cloud growth, but Alphabet and Amazon faced greater scrutiny over capital expenditure, cash flow and the sustainability of future earnings.
Three companies in Henriot's research universe illustrate the changing market environment. Microsoft, Alphabet and Intel provide different perspectives on growth, profitability and investor expectations, reinforcing the importance of evaluating individual businesses rather than relying solely on market momentum.
