Both ASX and American investors have probably gotten used to the S&P 500 Index (SP: .INX) delivering huge gains. With the flagship barometer of the American stock market up a whopping 20.3% in 2024 to date, it's not hard to see why.
While the S&P 500 has had a phenomenal year so far, it has also hit a bit of a rough patch over the past few days. It was only on Tuesday that the S&P 500 closed at 5,832.9 points. But last night, the index finished up at just 5,705.45 points—a 2.2% drop over two days. Last night alone, the S&P 500 shed a hefty 1.86% of its value.
Unfortunately, last night's loss alone means that the S&P 500 ends a significant winning streak. As reported by The Wall Street Journal, the index had risen in value for five straight months in a row before October. Last month would have made it six, the longest month-to-month winning streak for more than three years. Alas, last night's 1.86% drop means that the S&P 500 recorded a 0.99% loss for October.
So what ruined this party at the last moment?
Well, it seems that two of the largest stocks on the S&P 500 are at least partially responsible for last night's miserly performance.
Why did the S&P 500 choke at the October finish line?
The first is tech titan Microsoft Corporation (NASDAQ: MSFT).
As we covered this morning, Microsoft reported its latest quarterly earnings this morning (our time). And investors didn't exactly like what they saw.
Microsoft did report a 16% rise in revenues at US$65.59 billion, as well as earnings per share (EPS) of US$3.30. However, investors seemed disappointed by Microsoft's Azure cloud numbers, which came in slightly below what they did in the previous quarter. As did the company's artificial intelligence (AI) revenues.
As a result of these earnings, the Microsoft share price crashed 6.05% lower in this morning's trading session, leaving the company at US$406.35 a share.
Microsoft is currently the third-largest stock in the S&P 500. As such, this big fall would have been a major drag on the rest of the index.
The other big tech laggard in recent days has been Facebook-owner Meta Platoforms Inc (NASDAQ: META). Meta reported its own earnings earlier in the week. As our Fool colleagues over in the US covered, it was also a mixed quarter for this company.
Meta reported a 19% hike in year-on-year revenues for the quarter to US$40.6 billion, as well as a 37% surge in EPS to US$6.03. However, a 14% rise in operating expenses, driven by Meta's ambitious 'metaverse' plans, seemed to weigh in investors' minds. The Meta stock price fell 4.09% last night down to US$567.58.
Meta isn't quite as significant in the S&P 500 Index as Microsoft is. But this company is still the sixth-largest S&P 500 share, and as such, must share some of the blame for last night's S&P 500 route.
So, it seems that investors have these two S&P 500 giants to at least partially blame for October's disappointing finish. Let's see what happens this month.
