CNBC Daily Open: For Big Tech, beating earnings expectations is not enough

Prices increased in line with expectations  
The U.S. personal consumption expenditures index increased 0.2% in September, on a monthly and seasonally adjusted basis, reported the U.S. Commerce Department. The 12-month inflation rate was 2.1%. Both numbers were in line with Dow Jones estimates. The core inflation rate, which excludes food and energy prices, came in at 2.7%. 

Big Tech drags down markets 
Major U.S. indexes slumped on Thursday, weighed down heavily by losses in Big Tech shares. All three indexes fell for the month. Europe's Stoxx 600 index slid 1.2% to end October 3.4% lower, according to LSEG data, marking its worst monthly performance in a year. Separately, inflation in the euro zone in October rose to 2%, more than expected. 

Apple and Amazon beat estimates 
Apple's fiscal fourth-quarter earnings and revenue exceeded LSEG consensus estimates. The Cupertino-based company's iPhone revenue grew 6%. Meanwhile, Amazon also beat Wall Street's expectations for its third-quarter earnings and revenue. While the company's cloud division missed revenue expectations, it's growing faster than it had in the same period last year. 

New contract offer for Boeing workers 
Boeing and its machinists' union have reached a new contract offer that may end a seven-week-long strike involving more than 32,000 machinists. The new proposal bumps up wage increases and gives the option of a ratification bonus. Voting is scheduled for Monday, and the union urged its members to approve the contract. 

[PRO] Lowest cash level in mutual funds 
The U.S. presidential election is less than a week away. Usually, this uncertainty portends volatility in markets. But cash levels in mutual funds are at their lowest level on record, according to Bank of America, suggesting fund managers are unafraid of deploying cash into the markets. CNBC Pro's Jesse Pound explains what that means for markets.  

Expectations for Big Tech are so high that, ironically, beating expectations is no longer enough for them.  

Take Microsoft, for one. The company handily beat Wall Street's estimates – quarterly revenue was $1 billion more than expected and net income jumped 11% from the year-ago quarter – but its shares sank 6.1% Thursday. A conservative forecast for the quarter ending December disappointed investors, and gave Microsoft its worst day since Oct. 26, 2022. 

The picture's roughly the same with shares of Meta and Apple. Even Alphabet shares, which rose nearly 3% after reporting earnings on Wednesday, retreated 1.9% Thursday. 

"I think we're getting to the point where AI enthusiasm and potential is not enough. These companies … are not quite delivering the growth that is priced into them," said Ross Mayfield, investment strategist at Baird Private Wealth Management. 

The magnitude of the losses in those Big Tech companies dragged down the Nasdaq Composite, which fell 2.76%. The S&P 500, weighted heavily towards those megacap corporations, tumbled 1.86%. Both indexes had their worst day since Sept. 3. The Dow Jones Industrial Average lost 0.9%. All indexes ended October in the red. 

Some analysts, however, are still optimistic about Big Tech's catalyst to the growth of stocks. 

"The continued growth in AI-related capex reported by all three tech giants supports the positive structural trend," Solita Marcelli, UBS Global Wealth Management's CIO for the Americas, wrote in a note. Marcelli was referring to Microsoft, Alphabet and Meta. 

Likewise, Piper Sandler's chief market technician Craig Johnson wrote to clients that "the overall technical evidence remains constructive, and the primary trend of the major averages is higher," even if there are "near-term pullbacks or modest profit-taking."  

Therein lies the outsized burden on Big Tech. Investors and analysts don't just expect those companies to beat estimates. They also want megacap companies to drive markets, which is contingent more on growth prospects than earnings.  

In essence, Big Tech, more than any other sector, has to satisfy expectations for both the past and the future at the same time. 

— CNBC's Jordan Novet, Jesse Pound, Alex Harring, Hakyung Kim and Brian Evans contributed to this report.