Closing Bell: Stocks Fall, Applied Materials Highlights AI-Driven Strength

Key Points

• Markets closed sharply lower today, with the S&P 500 (SPX) down 1.66%, the Nasdaq-100 (NDX) down 2.05%, and the Russell 2000 (RUT) declining 2.7%.
• Applied Materials posted stronger-than-expected Q4 revenue despite a 3% year-over-year decline, raised guidance on growing AI equipment demand
• Disney shares dropped 7.75% after a revenue miss in its Entertainment segment, despite beating EPS estimates with strong Streaming and Experiences results

Markets closed lower today, with the S&P 500 (SPX) down 1.66%, the Nasdaq-100 (NDX) down 2.05%, and the Russell 2000 (RUT) down 2.7%. Energy was the only sector to post gains, while the biggest laggards were Consumer Discretionary, Technology, and Communication Services.

Applied Materials Tops Q4 Estimates

Applied Materials reported better-than-expected revenue for the fourth quarter, although it declined by 3% year over year. The company provided higher guidance as demand for AI equipment continues to grow, and its reduction in sales to China has largely been normalized by the market. Applied Materials is preparing for increased demand for AI equipment in the second half of 2026.

Disney Earnings Disappoint

Disney shares fell 7.75% after the company reported a revenue miss, driven by weak performance in its Entertainment segment, which includes linear TV and box office films. However, adjusted earnings per share exceeded consensus expectations, supported by strong results in the Streaming and Experiences segments. The company also announced it will double its stock buyback program to $7 billion.

Confidence in December Fed Rate Cut Fades

The FedWatch tool now shows the probability of a December Fed rate cut at roughly 50/50. Just one month ago, the odds were priced at 95.5%. With the government shutdown now behind us, concerns about the availability and accuracy of economic data have raised questions about how the FOMC will vote in December.

Key Market Events for Tomorrow

• 10:05 AM ET: FOMC Member Schmid Speaks
• 10:30 AM ET: Natural Gas Storage
• 2:30 PM ET: FOMC Member Logan Speaks
• 3:20 PM ET: FOMC Member Bostic Speaks

Notable Earnings for Tomorrow

• Premarket: PIII, SR
• Postmarket: QUBT