Key Highlights

● The S&P 500 fell 93.74 points to 7,663.43, its worst day since July.

● Lam Research reported record revenue of $8.22 billion yet plunged on its outlook.

● Procter & Gamble beat and reaffirmed guidance, posting its best day since March 2020.

● PulteGroup rallied on falling Treasury yields despite missing revenue estimates.

Thursday was a harsh day to be a company beating expectations.

Across the market, firms that topped earnings forecasts watched their shares slide. On Thursday, October 22, the S&P 500 fell 93.74 points to 7,663.43, its worst day since July, and the Nasdaq Composite tumbled 694 points to 26,008.86. In that environment, a beat was often not enough.

Records that weren't rewarded

Lam Research (NASDAQ:LRCX) offered the starkest example. The chip equipment maker reported record revenue of $8.22 billion and non-GAAP earnings of $2.20 a share, a beat, along with record margins. Yet the stock plunged to about $230.15, among the worst performers in the S&P 500.

The problem was the outlook. Lam guided December-quarter revenue to $8.6 billion, plus or minus $400 million. The midpoint was in line with official consensus but below what buy-side investors had hoped, and the company cited supply constraints. One brokerage cut its price target to $290 from $390.

Valero Energy (NYSE:VLO) reported a record quarter, with revenue of $46.1 billion against expectations of $41.74 billion, yet its shares slid. Nokia beat on comparable operating profit and still fell.

Guidance was the trap

TTM Technologies (NASDAQ:TTMI) beat on third-quarter revenue and earnings, but its shares plunged. Its fourth-quarter revenue guidance of $1.42 billion to $1.44 billion had a midpoint that trailed the consensus estimate.

Texas Instruments (NASDAQ:TXN) beat and guided above consensus on Wednesday evening, then gave back its after-hours gain amid the chip rout. IBM (NYSE:IBM) topped adjusted earnings forecasts but slid early before recovering to finish roughly flat.

Carpenter Technology (NYSE:CRS) beat on earnings per share but missed on revenue, and its shares cratered.

The after-hours echo

The pattern continued after the close. Western Digital (NASDAQ:WDC) beat and raised its guidance, but its shares fell after hours, though reports differed on the move. Bloom Energy (NYSE:BE) beat estimates and raised its 2026 outlook, yet fell after hours in what was described as a sell-the-news move. Comfort Systems USA (NYSE:FIX) reported revenue of $3.77 billion against forecasts of $3.39 billion and also slid after hours. SS&C Technologies (NASDAQ:SSNC) fell after hours on its fourth-quarter outlook despite an earnings beat.

Biotech joined in. Moderna (NASDAQ:MRNA) sank after Phase 3 melanoma data appeared before its scheduled presentation. One analyst called it "solid data" but described the reaction as a "sell the news" event.

The flip side was also visible. PulteGroup (NYSE:PHM) missed revenue estimates yet rallied as falling Treasury yields lifted homebuilders. Procter & Gamble (NYSE:PG) beat and reaffirmed its outlook and posted its best day since March 2020.

Why the bar was so high

Part of the explanation lies in how far many stocks had already run. The Philadelphia Semiconductor Index remains sharply higher for the year even after its biggest one-day drop since June 23. When expectations are that elevated, investors tend to focus on what comes next rather than what just happened.

The day's backdrop also mattered. Meta Platforms (NASDAQ:META)' negative free cash flow and roughly $825 billion in spending commitments put AI-related companies under heavy scrutiny, and money rotated into staples, health care and homebuilders.

Guidance Calls Loom Over Next Week's Reports

Earnings season accelerates next week. Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL) report on October 28 and Amazon (NASDAQ:AMZN), Intel (NASDAQ:INTC) and Caterpillar (NYSE:CAT) on October 29. Investors will watch whether guidance and spending commentary, rather than headline beats, continue to drive the biggest moves. American Express (NYSE:AXP) and Illinois Tool Works (NYSE:ITW) report on Friday, October 23.