Meta Layoffs, Key Earnings and Conflicting Headlines Spike Volatility

A quiet market session turned volatile on Thursday afternoon as a series of headlines about Iran hit the wires. There were reports that Iranian parliament speaker Mohammad-Bagher Ghalibaf resigned from the negotiating team following Revolutionary Guard intervention, but that was denied, and Pakistani mediators said negotiations were progressing. There were also reports of drone attacks and landmines in the Strait of Hormuz. Oil reacted immediately, with WTI jumping nearly 4% above $96.50 and Brent above $105.

At the same time this was happening, Meta Platforms (META) announced it would cut 10% of jobs to reduce overhead and help finance its massive capital spending. Earlier in the day, Microsoft (MSFT) announced a voluntary buyout offering early retirement to about 7% of its senior employees.

Intraday Reversal

There was a very sharp dip about 1:30 p.m. ET, but a big bounce cut the losses. At the closing bell the S&P 500 was down about 0.4%, the Magnificent Seven ETF (MAGS) was hit for a 1.7% loss, and only about 34% of stocks ended the day with gains.

It was a chaotic session driven by the news flow and the fact that many stocks are extended and in need of some rest. President Trump emphasized that he isn't feeling any rush to conclude the Iran matter, which means the market will have to continue to deal with this uncertain environment for a while.

Earnings Picture

The good news is that there are still plenty of investors who want to be on board when the "war has ended" headlines eventually hit. We also have a slew of earnings coming up, with Intel (INTC) reporting after the close Thursday and five of the Magnificent Seven names on deck next week. So far the Intel report is receiving a very positive response.

Earnings didn't do much to help on Thursday. International Business Machines (IBM) dropped about 8% after beating on the top and bottom lines, but leaving full-year guidance unchanged. ServiceNow (NOW) was hit for 17% as the company cited the Middle East conflict as a drag on subscription growth. Tesla (TSLA) slid after warning of a sharp capital spending ramp tied to AI. Salesforce (CRM) fell almost 9% in sympathy with the software group.

The reports weren't all bad. Texas Instruments (TXN) jumped 18% on strength across data center, automotive, and industrial. Penn Entertainment (PENN) gained 15% on a clean beat. United Rentals (URI) surged on a beat and raised guidance. Comcast (CMCSA) moved higher after topping estimates.

Of the 87 S&P 500 companies that have reported so far, 81% have beaten on earnings and 76% on revenue, so the backdrop is still constructive.

My Game Plan

I'm focused on managing positions. I took a partial stop on Meta and made a couple of sales and no new buys. Volatility is elevated but most charts still look pretty good. This is a tricky market to trade with all the news flow and earnings but conditions remain positive.

Have a good evening. I'll see you Thursday.

At the time of publication, Rev Shark was long META.