Dow Falls And Nasdaq Rises With Tech Earnings And First Republic Woes In Focus

U.S. stocks fell in late trading on Wednesday as strong earnings from big tech companies helped lift the Nasdaq Composite. After the San Francisco-based lender announced that it was taking deposits in shares. Market. Nasdaq was reported in March. After the collapse of Silicon Valley Bank.

On Tuesday, the Dow Jones Industrial Average fell 345 points, or 1.02%, to 33,531, the S&P 500 fell 65 points, or 1.58%, to 4,072, and the Nasdaq Composite fell 238 points, or 1.91%, to 91. .

What drives the market

A sharp rally in high-tech stocks after quarterly results helped lift U.S. stocks early Wednesday, but higher stocks in the afternoon helped investors turn some of their gains to new impulses. About the banking sector.

Shares of Microsoft rose on Tuesday after the software giant beat its earnings guidance after the close on Tuesday. Google parent Alphabet cheered investors with the results, but shares fell 0.4% in early morning trading.

“Microsoft and Alphabet, two companies whose fortunes are increasingly intertwined, are showing resilience as revenues come in better than expected thanks to competitive AI search offerings,” said Russ Mold, chief investment officer at AJ Bell.

Megacaps in technology stocks have led the stock market this year, and strong returns from Microsoft and Google have helped boost investor confidence, said Dan Hay, chief investment officer at Fort Pitt Capital Group.

look out Why the US stock market in general is hindering the success of Big Tech.

However, a sharp rise in technology failed to inspire the stock market as a whole on Wednesday. The Dow Industrials fell nearly 250 points in late trading, while Home Depot, Inc., Honeywell International Inc. and Merck & Co. were all lower.

Some market strategists believe gains in technology trading are unlikely to lead to a sustained rally in the stock market as company valuations remain high and the threat of a recession could weigh on market sentiment.

Mark Hafele, chief investment officer at UBS Global Wealth Management, said the S&P 500’s forward price-earnings ratio is now at 18x, its highest level in nearly a year and higher than before the pandemic.

With the S&P 500 historically trading at more than 18x, the average consensus expectation for earnings growth is 14%, or less than 2% for the 10-year Treasury yield. Today, the market expects S&P 500 earnings to rise 5% in the second half of the year, with the 10-year Treasury yield up to 3.4%,” wrote a group of strategists led by Hafele in a published statement. on Wednesday.

Meanwhile, the latest economic data shows that the US economy is generally weakening. The strategist said, “We expect stocks to be volatile in the near term as the market fluctuates between a slight downward trend and a fall.”

look out Stock strategist David Rosenberg warns Fed ‘meltdown’ could send S&P 500 down 20%. Now there are 3 ways to protect your money.

Renewed concerns about First Republic Bank weighed on market sentiment and raised concerns about the health of the US banking sector.

The San Francisco-based lender said Monday that two regional U.S. banks lost nearly 40% of deposits in the first quarter due to heavy losses on their bond portfolios and high deposits.

Shares of First Republic continued to fall sharply from the previous day Wednesday, as the troubled regional bank was on the verge of closing with a market capitalization of less than $1 billion, according to Dow Jones market data.

“First Republic Bank’s woes have opened wounds since March, when investors renewed concerns about the financial system, and at the start of this reporting season, US banks have suffered major losses. The number of regional lenders … is disappointing. There will be serious investigations in the coming days and weeks,” he said. Mol.

Ai says that the problems associated with the First Republic “have not yet been resolved”. He pointed out that the lenders seem strange when it comes to runaway deposits. “We haven’t seen this kind of performance in other banks,” he said in a phone interview.

look out Deposits will be reduced at First Republic and other banks that deserve to look at systemic loopholes, a former Fed official said.

On Wednesday, the government cited US economic data saying durable goods orders rose 3.2% last month. Economists polled by the Wall Street Journal had expected growth of 0.5%. But without cars and aircraft, orders increased slightly by 0.3%. The transportation sector is a large and dynamic category that often exposes the ups and downs of industrial production. Business investment also fell for the fourth time in five months, another sign that the US economy is slowing.

The U.S. merchandise trade deficit fell 8.4 percent in March to a four-month low of $84.6 billion, while U.S. exports fell, which may have provided a modest boost to GDP growth in the first quarter.

Company attention

  • The Boeing Company Shares rose 1.2 percent on Wednesday after the aerospace and defense company reported a bigger-than-expected loss, but beat forecasts as losses in revenue and free cash flow were offset by trading. Defense, Space and Security (DSS). I miss the commercial jet business.
  • Video game publisher shares Activision Blizzard Inc It fell 11.7% on Wednesday after UK regulators said they were considering a merger with Microsoft Corp because it could negatively impact competition in the cloud gaming market.
  • Shares of Norfolk Southern Corp It fell 2.8% on Wednesday, even as the rail operator reported better-than-expected first-quarter adjusted earnings, as strong freight and coal business offset weakness in the intermodal sector. .
  • Shares of Chipotle Mexican Grill Inc The company rose 13.6 percent after reporting better-than-expected first-quarter results, thanks to new restaurant openings and lower avocado prices.

Jamie Chisholm contributed to this article.

Stocks break apart after strong results from Microsoft and Google: Today’s Stock News | April 26, 2023

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