Stocks end mixed on Wall Street amid weak tech earnings
Weak quarterly results from several big technology companies weighed on stocks Wednesday, leaving major indexes mixed on Wall Street.
The Standard & Poor’s 500 index fell 0.7% after shedding an early gain, while the tech-heavy Nasdaq composite dropped 2%. The lower finish ended a three-day winning streak for both indexes.
The Dow Jones industrial average ended just barely in the green after having been up 1.1%, thanks in part to a big jump in Visa.
Smaller-company stocks far outpaced the broader market, lifting the Russell 2000 index 0.5%.
“A handful of very large companies are weighing on the indexes,” said Willie Delwiche, investment strategist at All Star Charts. “The more exposed you are to those mega-cap tech stocks the more you’re down today, and the less exposed you are the less you’re down.”
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The S&P 500 fell 28.51 points to 3,830.60. The Nasdaq fell 228.12 points to 10,970.99. The Dow rose 2.37 points to close at 31,839.11. It had briefly been up by more than 335 points. The Russell 2000 added 8.18 points at 1,804.33.
Google’s parent company, Alphabet, slumped 9.6% after it reported disappointing third-quarter financial results as advertising sales weakened. Weak ad sales are threatening other tech and communications companies. Music streaming service Spotify fell 13% after it reported a bigger third-quarter loss than Wall Street expected.
Microsoft slid 7.7% after it reported disappointing growth for its cloud computing company, while profit fell along with PC sales. Chipmaker Texas Instruments fell 2.6% after giving investors a discouraging forecast for the current quarter.
Facebook’s parent company, Meta Platforms, fell 10.8% in after-hours trading following the release of its third-quarter earnings, which fell short of analysts’ forecasts, according to FactSet. The stock fell 5.6% in regular trading.
Stocks with huge valuations, such as Microsoft, Meta Platforms and Google parent Alphabet, can have a big effect on market indexes. In the S&P 500, the slide in technology and communications stocks outweighed gains elsewhere in the benchmark index, including in healthcare and energy companies.
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Traders bid up shares in companies that delivered improved quarterly results Wednesday.
Visa rose 4.6% after reporting strong financial results and raising its dividend. Norfolk Southern gained 2.9% after reporting a surge in profit on an increase in shipping rates.
Outside of earnings, Mobileye Global, Intel’s self-driving unit, rose 38% in its market debut.
Several other big companies are on deck to report earnings this week. Apple and Amazon report results Thursday, along with industrial bellwether Caterpillar and McDonald’s.
The tech-stock losses also overshadowed another slide in Treasury yields, which helped boost stocks earlier in the week as they pulled back from their multiyear highs.
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Bond yields have been declining amid speculation among investors that the Federal Reserve may begin easing up on its aggressive pace of interest rate increases as soon as this year. Gains in those rates have sent mortgage rates sharply higher this year.
The yield on the 10-year Treasury fell to 4.01% from 4.10% late Tuesday. The two-year yield fell to 4.42% from 4.48%.
Investors are mainly focused on earnings this week, but also are waiting for several economic updates as they try to get a better picture of how inflation is affecting businesses, consumers and the Fed’s plans for interest rate increases.
The government will release its first estimate on third-quarter gross domestic product Thursday. The U.S. economy is already slowing down and contracted during the first half the year. On Friday, the government will release more data on personal income, consumption and spending.
The latest economic data are being closely watched for any signs of a slowdown as Wall Street tries to determine if and when the Fed might ease up on its rate hikes. The central bank is expected to raise interest rates another three-quarters of a percentage point at its upcoming meeting in November. But traders have grown more confident that it will dial down to a more modest increase of half a percentage point in December, according to CME Group.
Investors have been concerned that the Fed could go too far with rate increases and cause a recession by slowing the economy too much.
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