S&P 500 futures took a downturn after the index experienced its second consecutive day of losses. The market's reaction was swift, with futures tied to the broad market index dropping 0.1%, and Nasdaq 100 futures falling 0.2%. The Dow futures saw a more significant decline, shedding 94 points, or 0.2%.
In after-hours trading, Apple's shares surged by about 1%, surpassing earnings and revenue expectations for the fiscal first quarter. This surge was fueled by a remarkable increase in iPhone sales. Sandisk, a data storage stock, witnessed a 14% surge in its share price, attributed to its strong financial guidance. Conversely, KLA Corp. witnessed a decline of over 8% due to its less-than-expected guidance for non-GAAP gross margin in the fiscal third quarter.
During the regular trading session, the S&P 500 closed 0.1% lower, while the tech-heavy Nasdaq Composite declined by 0.7%. The Dow Jones Industrial Average managed a slight gain of 0.11%, or approximately 56 points. A post-earnings plunge in Microsoft's stock, which slid about 10%, had a negative impact on both the S&P 500 and the Nasdaq. This decline was attributed to Microsoft's reported slowdown in the growth of its Azure cloud division and soft guidance on operating margin for the fiscal third quarter. Software stocks experienced a downturn due to growing concerns that artificial intelligence could potentially threaten their business models.
Angelo Kourkafas, a senior global investment strategist at Edward Jones, highlighted a significant trend. He noted that companies are intensifying their spending on AI-related infrastructure, and markets are rewarding those that can convert these investments into earnings. However, firms lacking a clear monetization strategy are facing increased scrutiny. Despite the tech sector's anticipated strong profit growth, it is experiencing a slowdown compared to earlier quarters, with other sectors accelerating. This shift supports the notion that market leadership is broadening, according to Kourkafas.
Despite the recent market fluctuations, investors remain optimistic. The latest AAII survey reveals a decline in pessimism among individual investors regarding the six-month outlook for stocks. Bullish sentiment has increased to 44.4%, surpassing the long-run historical average of 37.5% for the ninth time in 12 weeks. Neutral sentiment toward stocks has remained steady at 24.8%, falling below its historical average of 31.5% for the 80th time in 82 weeks.
In after-hours trading, several stocks made notable moves. Apple's shares rose by less than 1%, driven by its exceptional fiscal first-quarter results, particularly strong revenue from the iPhone 17 models released in September. Sandisk's shares surged by 11%, supported by its solid financial guidance. Visa's shares slipped by nearly 2% despite strong fiscal first-quarter results, attributed to a surge in cross-border payments and payment volume. Western Digital's shares rose by about 1%, backed by its positive fiscal third-quarter forecast.
The U.S. stock futures opened with minimal changes, indicating a cautious market sentiment as investors await further developments.
