On the last day of October, U.S. stock markets erased all gains for the month as a sell-off in major technology stocks, including Microsoft (MSFT, Financial) and Meta, led to the most significant single-day decline on Wall Street in nearly two months. The S&P 500 closed down 1.9%, while the tech-heavy Nasdaq Composite fell 2.8%.
Leading the decline, Microsoft (MSFT, Financial) shares dropped 6.1%, marking their largest one-day drop in two years. This came after the company released its fiscal first-quarter earnings report, which, despite surpassing analyst expectations in both revenue and profit, disappointed with its future earning prospects. Concerns also lingered over Microsoft's ability to reap sufficient benefits from AI investments.
Similarly, Meta, the parent company of Facebook, reported its third-quarter results, surpassing analyst forecasts but still saw its stock fall by 4.1%. Analysts worry about potential challenges for Meta, including declining user engagement and reduced advertising demand amid rising competition. Additionally, Meta's investments in enhanced security and data privacy could further pressure profit margins.
After the market closed on Thursday, Apple (AAPL) also released its fiscal fourth-quarter results, beating Wall Street expectations on revenue and earnings per share. However, a substantial drop in net profit due to a one-time charge related to an EU tax ruling led to a 2% decline in its after-hours stock price.
Amid these declines, Octobers' performance broke the S&P 500's five-month streak of increases. This period saw historic highs in U.S. stock markets, driven by expectations of the Federal Reserve loosening monetary policy and data indicating a "soft landing" for the economy.
The recent market downturn coincides with the upcoming U.S. Election Day, intensifying investor anxiety. The anticipation of the Federal Reserve meeting next week further adds to this unease. U.S. Treasury yields and the dollar have reached their highest levels in about three months.
In October, the policy-sensitive two-year U.S. Treasury yield edged up to 4.16%, marking its most significant monthly gain since February 2023. The benchmark 10-year Treasury yield is poised to achieve its largest monthly increase since September 2022, rising by 0.5 percentage points to approximately 4.28%. Additionally, the dollar appreciated by 3.3% against a basket of six major currencies, aiming for its largest monthly rise since April 2022.
