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Meta Platforms ( META ), Microsoft ( MSFT ) drag megacaps lower

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Estee Lauder ( EL ) on track for worst day on record

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September PCE data in line with estimates

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VIX rises to more than three-week high

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Indexes down: Dow 0.44%, S&P 500 0.86%, Nasdaq 1.4%

(Updated at 9:44 a.m. ET/1344 GMT)

By Lisa Pauline Mattackal

Oct 31 (Reuters) -

Wall Street fell on Thursday, as warnings from Microsoft ( MSFT ) and

Meta Platforms ( META ) about soaring AI costs dampened enthusiasm for

megacap stocks, which have led the market this year.

Shares of Facebook-owner Meta Platforms ( META ) dipped

2.8%, while Microsoft ( MSFT ) lost 5.1%, despite both companies

beating earnings estimates in results reported after the bell on

Wednesday.

The yield on the benchmark 10-year Treasury note

also edged up, past 4.3%, further pressuring equities.

Meanwhile, the Personal Consumption Expenditures price

index, the Federal Reserve's preferred inflation metric, rose

0.2% in September, in line with economists' expectation.

However, the core figure was 2.7%, slightly higher than the 2.6%

forecast, while consumer spending increased a little more than

expected.

"Investors are pondering results from Microsoft ( MSFT ) and Meta

more than the economic news," said Peter Cardillo, chief market

economist at Spartan Capital Securities.

"Still, the inflation news could up the chances the Fed

pauses (interest-rate cuts) next week. That could be on

investors' mind and cause some more negativity in the medium

term."

Ahead of nonfarm payrolls numbers, due on Friday, data

from the Labor Department showed the number of Americans filing

new applications for unemployment fell to 216,000 claims last

week.

Microsoft ( MSFT ) and Meta both said their

capital expenses

were growing due to AI investments, which could pressure

profitability, even as investors look for quick returns on the

billions already poured in.

Other so-called Magnificent Seven stocks slipped, with

Nvidia ( NVDA ) losing 2.8%. Amazon.com ( AMZN ) was down 1.7%

and Apple ( AAPL ) dipped 0.4% ahead of quarterly results from

both, due after market close.

Although betting on AI-driven tech stocks propelled Wall

Street to record highs this year, investor exuberance has meant

stocks are trading at incredibly expensive valuations. Meta and

Microsoft's ( MSFT ) warnings point to the challenges companies face in

pleasing investors.

The Dow Jones Industrial Average fell 184.51

points, or 0.44%, to 41,957.03, the S&P 500 lost 50.05

points, or 0.86%, to 5,763.62 and the Nasdaq Composite

lost 261.19 points, or 1.40%, to 18,346.74.

Traders stuck to

bets

for 25-basis-point rate reductions in the Fed's November as

well as December meetings after the economic data was released.

The Information Technology sector slumped

2.1%, while upbeat results from ConocoPhillips ( COP ) lifted

Energy shares 1%.

The day's losses took the benchmark index into negative

territory for the month. The Nasdaq Composite was set to

rise slightly in October, while the Dow was on track to lose

more than 1%.

The VIX, Wall Street's "fear gauge", rose to a more

than three-week high as investors brace for more volatility from

corporate results, the upcoming U.S. presidential election and

the central bank's November meeting in the next few weeks.

In results-driven moves, Estee Lauder ( EL ) plummeted

22%, on track for its worst day on record after the

cosmetics company

withdrew its 2025 annual forecasts and cut its dividend.

Trading platform Robinhood slumped 14.4% after its

third-quarter earnings missed expectations.

Shares of Uber Technologies ( UBER ) plunged 8% after the

company forecast fourth-quarter gross bookings below

expectations.

Declining issues outnumbered advancers by a 1.26-to-1

ratio on the NYSE, and by a 1.67-to-1 ratio on the Nasdaq.

The S&P 500 posted 20 new 52-week highs and five new

lows, while the Nasdaq Composite recorded 37 new highs and 54

new lows.