A slide in big tech sent the stock market to its lowest since May after another round of disappointing earnings. In late trading, Amazon.com Inc. climbed as sales beat estimates.

The S&P 500 dropped 1.2 per cent, edging closer to a “correction” — with the gauge down almost 10 per cent from its July peak. The Nasdaq 100 sank nearly 2 per cent as Meta Platforms Inc. slumped after dashing hopes for a long-term advertising recovery. The Facebook parent, Nvidia Corp. and Microsoft Corp. lost at least 3.4 per cent. Treasury yields fell as economic data reinforced bets on a Federal Reserve pause.

Traders also kept a close eye on geopolitical developments, with Israel’s military saying it killed Hamas’s deputy head of intelligence, who it said was responsible for helping plan the Oct. 7 attacks. The army overnight also made a limited ground raid into northern Gaza. Oil dropped below US$84 a barrel. The euro edged lower as the European Central Bank kept rates unchanged as expected.

The so-called Magnificent Seven tech companies have wiped about $200 billion off their value after reporting results. Aside from Meta, Google owner Alphabet Inc. and Tesla Inc. have also slipped, with Microsoft the only bright spot.

“The positive earnings reports from the big-tech stocks that the bulls were hoping for has not come to fruition,” said Matt Maley, chief market strategist at Miller Tabak + Co.

Two-year yields, which are more sensitive to imminent Fed moves, dropped eight basis points to 5.04 per cent. Swap contracts project 32 per cent odds for one more Fed hike in the current tightening cycle.

Treasury Secretary Janet Yellen said that the surge in longer-term bond yields in recent months is a reflection of a strong economy and expectations that interest rates may have to stay higher for longer.

A survey conducted by 22V Research shows that 71 per cent of the investors polled don’t think the 10-year yield — which recently hit 5 per cent — has peaked. They expect it to keep increasing, with the median expectation for the peak at 5.5 per cent. Nineteen percent see the yield peaking at or above 6 per cent.

“The stock market isn’t ready to rally until bond yields are sharply lower, which probably won’t happen until we see inflation a lot closer to the Fed’s target,” said Edward Moya, senior market analyst for the Americas at Oanda.

The US economy grew at the fastest pace in nearly two years last quarter amid a surge in consumer spending. A closely watched measure of underlying inflation cooled more than expected to the slowest pace since 2020.

Wall Street’s Reaction to GDP:

Lindsay Rosner, head of multi-sector fixed-income investing at Goldman Sachs Asset Management:

“It does not move the needle for the November FOMC meeting — which is certainly a skip. Higher and hold, yes. Higher and hiking, no.”

Mike Loewengart, head of model portfolio construction at Morgan Stanley Global Investment Office:

“The odds may favor no change to interest rates next week, but today’s stronger-than-expected economic data also means no change to the Fed’s hawkish stance.”

Callie Cox at eToro:

“A recession still isn’t out of the question. But as the days pass and data improves, it sure does look like the Fed is achieving a soft landing with minimal harm to the economy. If you’re a broad-market investor, I’d take some comfort in the fact that the worst-case scenario seems to be off the table.”

Richard Flynn, managing director at Charles Schwab UK:

“While these numbers are the latest in a string of indicators that paint a picture of economic resilience, investors will likely remain cognizant that the risk of recession lingers.

Chris Zaccarelli, chief investment officer at Independent Advisor Alliance:

“If the recession that people have been predicting for the past 18 months doesn’t materialize this year and economic trends that are currently in place persist, then the market will bounce back from its lows, just like it did at the end of last year.”

Corporate Highlights:

• Mastercard Inc. fell after the payments network predicted revenue growth for the coming quarter that undercut analyst forecasts, even as consumers continued to weather rising rates with robust spending on their cards.
• Western Digital Corp. sank after deal negotiations with Kioxia Holdings Corp. broke down, quashing hopes for a combination of their flash memory businesses.
• Hasbro Inc. slid after reporting quarterly results that missed Wall Street estimates on sales and earnings and lowering its annual revenue forecast due to a softer toy market heading into the holiday season.
• Harley-Davidson Inc. sank as profit missed estimates and sales plunged amid elevated borrowing costs in the US and economic weakness around the globe.
• Comcast Corp. retreated after reporting drops in broadband and cable subscribers, and predicting more losses to come.
• Hertz Global Holdings Inc. slid after missing profit estimates as it grapples with higher depreciation costs for its vehicles, which were unusually low in 2022.
• International Business Machines Corp. gained as it reported better-than-expected sales and affirmed its full-year outlook, suggesting the company’s focus on software and hybrid cloud services is paying off.
• First Citizens BancShares Inc., the regional lender that acquired Silicon Valley Bank when it failed in March, said deposits beat estimates helped by growth in its direct bank channel. The shares rallied.
• Bunge Ltd. climbed after raising its earnings outlook after posting third-quarter profits that blew up beyond the highest estimates.

Key events this week:

• China industrial profits, Friday
• Japan Tokyo CPI, Friday
• U.S. PCE deflator, personal spending and income, University of Michigan consumer sentiment, Friday
• Exxon Mobil earnings, Friday

Some of the main moves in markets:
Stocks

• The S&P 500 fell 1.2 per cent as of 4 p.m. New York time
• The Nasdaq 100 fell 1.9 per cent
• The Dow Jones Industrial Average fell 0.8 per cent
• The MSCI World index fell 1.1 per cent

Currencies

• The Bloomberg Dollar Spot Index was little changed
• The euro was little changed at $1.0556
• The British pound was little changed at $1.2121
• The Japanese yen fell 0.1 per cent to 150.42 per dollar

Cryptocurrencies

• Bitcoin fell 1.8 per cent to $34,048.4
• Ether rose 0.2 per cent to $1,791.9

Bonds

• The yield on 10-year Treasuries declined 11 basis points to 4.84 per cent
• Germany’s 10-year yield declined three basis points to 2.86 per cent
• Britain’s 10-year yield declined one basis point to 4.60 per cent

Commodities

• West Texas Intermediate crude fell 2.2 per cent to $83.48 a barrel
• Gold futures were little changed

This story was produced with the assistance of Bloomberg Automation.