Key Points:

• Investors digested earnings from major companies this week
• Earlier, the ECB lifted its policy rate by 75 basis points
• US Stocks Fall Before Amazon, Apple Add to Woes

Wall Street contended with another volatile session as investors mulled the Federal Reserve’s path of interest-rate hikes while assessing mixed conomic data and a slew of earnings reports. 

Amazon.com Inc. plunged after hours as its sales forecast trailed estimates. Shares of Apple Inc. struggled for direction postmarket after it reported weaker-than-expected iPhone and services sales in its latest quarter.

The S&P 500 closed lower, after swinging between gains and losses for most of the session. The Nasdaq 100 fell more than 1% in regular trading and an exchange-traded fund tracking it slid further after 4 p.m. in New York. Lackluster earnings from several megacap firms this week dampened sentiment and underscored the impact of the Fed’s tightening regime. Meta Platforms Inc. posted its worst one-day drop since February on Thursday, triggered by burgeoning metaverse costs and a decline in revenue.

Markets were also mixed on US gross domestic product data. The report showed the US economy rebounded after two quarterly contractions, which briefly assuaged concerns of an imminent recession. But it also highlighted that consumer spending remains under pressure because of inflation. Treasuries gained, with the 10-year yield pushing below 4% on speculation of a Fed pivot. The dollar snapped a two-day drop.  

“The US dollar is reading into this that perhaps it’s going to keep the Fed on that hawkish path for longer,” Cincotta said by phone. “Whereas the stock market seems to be reading it completely differently, almost as if it’s expecting the Fed to be sort of moving toward that less hawkish stuff.

Economists still expect the Fed to hike by three-quarters of a percentage point for the fourth time in a row when it meets next week. But with recent data highlighting the effects of the Fed’s sharp rate hikes on the economy, investors expect the central bank to slow its pace of tightening after November’s meeting.  

Earlier, the European Central Bank lifted its policy rate by 75 basis points — in line with expectations — and signaled more tightening ahead. But ECB officials weren’t unanimous about the size of the interest-rate hike and sought to avoid giving a specific signal on their next move in December, according to people familiar with the matter.