Financial Markets                      10/31 15:37

   

   NEW YORK (AP) -- The downside of high expectations thumped Wall Street on 
Thursday, and Microsoft and Meta Platforms dragged U.S. stock indexes lower 
despite delivering strong profits for the summer.

   The S&P 500 sank 1.9% for its worst day in eight weeks and fell further from 
its record set earlier this month. The Dow Jones Industrial Average dropped 378 
points, or 0.9%, while the Nasdaq composite tumbled 2.8% for a second straight 
loss after setting its latest all-time high.

   Microsoft reported bigger profit growth for the latest quarter than analysts 
expected. Its revenue also topped forecasts, but its stock nevertheless sank 6% 
as investors and analysts scoured for possible disappointments. Many centered 
on Microsoft's estimate for upcoming growth in its Azure cloud-computing 
business, which fell short of some analysts' expectations.

   The parent company of Facebook, meanwhile, likewise served up a 
better-than-expected profit report. As with Microsoft, that wasn't enough to 
boost its stock. Investors focused instead on Meta Platforms' warning that it 
expects a "significant acceleration" in spending next year as it continues to 
pour money into developing artificial intelligence. It fell 4.1%.

   Both Microsoft and Meta Platforms have soared in recent years amid a frenzy 
around AI, and they're entrenched among Wall Street's most influential stocks. 
But such stellar performances have critics saying their stock prices have 
simply climbed too fast, leaving them too expensive. It's difficult to meet 
everyone's expectations when they're so high, and Microsoft and Meta were both 
among Thursday's heaviest weights on the S&P 500.

   Amazon and Apple also helped drag the market lower, with Amazon falling 3.4% 
and Apple dropping 2% before they released their profit reports after trading 
ended for the day. They're the latest companies in the highly influential group 
of stocks known as the "Magnificent Seven" to do so.

   Earlier this month, Tesla and Alphabet kicked off the Magnificent Seven's 
reports with results that investors found impressive enough to reward with 
higher stock prices.

   The lone remaining member, Nvidia, will report its results later this 
earnings season, and its 4.8% drop was Thursday's heaviest weight on the market 
after Microsoft. Expectations are just as high for the chip company after its 
stock soared over 880% in the last two years.

   The tumble for Big Tech on the last day of October wiped out the S&P 500's 
gain for the month. The index fell 1% for its first down month in the last six, 
even though it set an all-time high during the middle of it.

   Such a big move might have been overdue following an unusually long and 
placid run, according to Jonathan Krinsky at BTIG. He pointed to how the S&P 
500 had failed to move by 1% in a day in either direction, without accounting 
for rounding, for the longest stretch in nearly three years.

   Still, Thursday wasn't a complete washout thanks in part to cruise ships and 
cigarettes.

   Norwegian Cruise Line Holding steamed 6.3% higher after delivering stronger 
profit for the latest quarter than analysts expected. The cruise ship operator 
said it was seeing strong demand from customers across its brands and 
itineraries, and it raised its profit forecast for the full year of 2024.

   Altria Group rose 7.8% for another one of the S&P 500's bigger gains after 
beating analysts' profit expectations. Chief Executive Billy Gifford credited 
resilience for its Marlboro brand, among other things, and announced a 
cost-cutting initiative.

   Oil-and-gas companies also rose after the price of a barrel of U.S. crude 
gained 0.9% to recoup some of its losses for the week and for the year so far. 
ConocoPhillips jumped 6.4%.

   All told, the S&P 500 fell 108.22 points to 5,705.45. The Dow dropped 378.08 
to 41,736.46, and the Nasdaq composite tumbled 512.78 to 18,095.15.

   In the bond market, Treasury yields edged lower following a mixed set of 
reports on the U.S. economy.

   One report said a measure of inflation that the Federal Reserve likes to use 
slowed to 2.1% in September from 2.3%. That's almost all the way back to the 
Fed's 2% target, though underlying trends after ignoring food and energy costs 
were a touch hotter than economists expected.

   A separate report said growth in workers' wages and benefits slowed during 
the summer. That could put less pressure on upcoming inflation. A third report, 
meanwhile, said fewer U.S. workers applied for unemployment benefits last week. 
That's an indication that the number of layoffs remains relatively low across 
the country.

   Treasury yields swiveled up and down several times following the reports 
before moving lower. The yield on the 10-year Treasury fell to 4.27% from 4.30% 
late Wednesday. That's still up sharply from the roughly 3.60% level it was at 
in the middle of last month.

   Yields have been rising following a string of stronger-than-expected reports 
on the U.S. economy. Such data bolster hopes that the economy can avoid a 
recession, particularly now that the Fed is cutting interest rates to support 
the job market instead of keeping them high to quash high inflation. But the 
surprising resilience is also forcing traders to downgrade their expectations 
for how deeply the Fed will ultimately cut rates.

   In stock markets abroad, indexes sank across much of Europe and Asia.

   South Korea's Kospi dropped 1.5% for one of the larger losses after North 
Korea test launched a new intercontinental ballistic missile designed to be 
able to hit the U.S. mainland in a move that was likely meant to grab America's 
attention ahead of Election Day.

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   AP Business Writers Yuri Kageyama and Matt Ott contributed

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