S&P 500 Falls 1% as Investors Await Amazon & Apple Earnings Amid AI Spending Concerns

Market Close and Major Indices

• 📉 The trading day concluded with major U.S. indices in the red: the Dow down 0.2%, the S&P 500 down 1%, and the Nasdaq down 1.5%.
• 📈 The Russell 2000 also saw a decline of 0.8%, while the Dow Transports was a lone bright spot, up 0.9%.
• 📊 Across the S&P 500, 235 stocks gained, 266 declined, and three remained unchanged.

Sector Performance

• ⚠️ The tech sector experienced significant pain, while real estate, financials, and health care were among the few sectors in the green.
• 🎯 Real estate, financials, and health care showed resilience, with modest gains on a day when the broader market trended downwards.

Amazon Earnings and Performance

• 📦 Amazon reported third-quarter net sales of $80.2 billion, beating estimates, with adjusted EPS at $1.95, also a beat.
• ⚠️ However, operating margin came in light at 9.7% (street estimate 11.1%), and Amazon Web Services (AWS) net sales of $33 billion missed expectations.
• 🚀 Despite mixed results, Amazon's shares surged approximately 10% in after-hours trading, with CEO Andy Jassy highlighting strong momentum in AI drives and AWS re-accelerating growth to 20.2%.
• 🚗 Amazon also plans to expand same-day delivery of perishable groceries to over 2300 communities and double rural communities with same-day/next-day delivery access.
• 💰 The company reported $0.8 billion in severance costs and $2.5 billion in costs related to a legal settlement in the most recent quarter.
• 💡 Amazon's investment in Anthropic, a rival to OpenAI, was noted, with a $9.5 billion pre-tax gain included in non-operating income.

Other Notable Earnings Reports

• 📉 Roku shares fell 14% in after-hours trading despite meeting full-year net revenue forecasts and boosting its outlook.
• 📈 Atlassian (ticker TEAM) shares jumped 12% after a strong beat on earnings and cloud revenue, with positive guidance for the next quarter.
• 🚀 Coinbase saw shares move slightly, up 1% in after-hours, after reporting total revenue and subscription/services revenue above estimates, though trading volume missed expectations.
• 📈 Reddit shares rose 11% in after-hours trading, beating estimates for daily active users and net income.
• ☁️ Twilio showed positive movement, up nearly 6% in after-hours, with its fiscal year outlook for adjusted operating income and organic revenue exceeding street estimates.
• 🏠 Zillow's third-quarter revenue and adjusted EPS beat estimates, and its fourth-quarter revenue outlook was also above expectations, yet shares were down about 1% in after-hours.