Nasdaq Adds 264 Points in Tech Rebound: Stock Market Today
Stocks closed out a volatile week on a relatively quiet note as market participants caught their breath after Thursday’s broad-based beatdown.
The tech-heavy Nasdaq Composite made a valiant attempt at a rebound as several tech stocks bounced, but Friday’s gains put just a small dent in its weekly decline. Moves by the broader S&P 500 and blue-chip Dow Jones Industrial Average were far less impressive.
At the close, the Nasdaq was up 1.1% at 24,579 — still in correction territory, but paring its week-over-week deficit to 3.4%. The S&P 500 finished the day up 0.3% at 7,376, and the week down 2.7%. And the Dow slipped 0.5% Friday to 51,285, and was 0.9% lower on the week.
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Markets sold off sharply Thursday on concerns that Democratic leadership in Washington and several states, from Texas to Ohio, will create headwinds for the data center buildout.
Several tech stocks that were hit the hardest on Thursday swung higher on Friday, including memory chipmaker Micron Technology (MU, +5.1%) and artificial intelligence (AI) bellwether Nvidia (NVDA, +2.8%).
However, reports that Microsoft (MSFT, -1.0%) plans to use fewer neoclouds, which provide high-performance infrastructure to power AI workloads, hung over the tech sector.
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CoreWeave (CRWV, +6.3%), one of Wall Street’s most notable neoclouds, headlines next week’s earnings calendar. Wall Street is forecasting a wider per-share loss than the company reported in the year-ago period, though revenue growth is expected to be strong.
Airbnb soars on earnings beat
Outside of the tech sector, Airbnb (ABNB) jumped 11.7% after the online travel company reported third-quarter earnings of $3.16 per share, up 43% year over year and more than Wall Street expected.
Revenue also beat estimates, surging 19% to $4.9 billion, the fastest top-line growth in three years.
UBS Global Research analyst Stephen Ju says Airbnb’s Q3 results “were the standout” among online travel agents. And while the company is more shielded from major uncertainties in the Middle East and Europe, “more important consideration for us on ABNB shares is the company’s pace of innovation for which is seemingly arriving at a faster clip.”
Ju maintained a Neutral (Hold) rating on ABNB after earnings, but raised his price target on the consumer discretionary stock to $191 from $181.
DraftKings spirals after lowering guidance
DraftKings (DKNG), on the other hand, plunged 21.3% — its worst day since November 2022 — after the sports gambling company reported a top- and bottom-line third-quarter miss. DKNG also cut its full-year forecast, saying its investments in prediction markets will cut into profits.
“Investors are disappointed by the magnitude of PM investment given the looming regulatory risk around sports event contracts,” says BofA Securities analyst Julie Hoover. “DKNG’s desire to be best-in-class has driven its top-line success, but greater guardrails around spend, particularly in the current regulatory backdrop, are critical to drive the bottom line and stock.”
Hoover reiterated her Buy rating on DKNG after earnings, saying prediction markets are “a potential source of upside” for the stock.
Jobs data blows past expectations, CPI on deck
In economic news, data from the Bureau of Labor Statistics showed the U.S. added 165,000 new jobs in October, blowing past expectations for 59,000 jobs. The unemployment rate dropped to 4.1% from 4.2%.
“The job market strengthened in October, with considerably better payrolls growth than expected,” says Bill Adams, chief U.S. economist at Fifth Third Commercial Bank. “AI is clearly weighing on some types of white-collar jobs, but not all.”
Adams adds that the Fed “will be reassured by the October jobs report, but if the AI sell-off deepens, they could still refrain from a rate hike at their last decision of the year.”
According to CME Group FedWatch, futures traders are currently pricing in a 77% chance the Fed will raise interest rates in December — up from 71% a week ago. This is subject to change following the release of the October Consumer Price Index (CPI) report next Tuesday morning.
While headline inflation is expected to moderate as gas prices eased, it will likely remain well above the central bank’s 2% target.
