S&P 500 and Nasdaq end sharply lower as Alphabet disappoints, Treasury yields rebound

  • New home sales beat consensus, and mortgage rates hit a 23-year high
  • The S&P 500 index closes below the 4200 level
  • Nasdaq’s biggest one-day drop since February
  • IBM, Meta rises in extended trading after results
  • Indices fell: Dow Jones 0.32%, Standard & Poor’s 1.43%, Nasdaq 2.43%.

NEW YORK (Reuters) – U.S. stocks tumbled amid a broad sell-off on Wednesday, with Alphabet shares falling after Google’s parent company reported disappointing earnings and as U.S. Treasury yields rose, renewing concerns that interest rates could stay high for longer.

The benchmark S&P 500 index posted its fifth daily decline in six days to close below the closely watched 4,200 level. The Nasdaq Composite fell to its biggest single-session percentage decline since February 21, as interest rate-sensitive blue-chip stocks weighed heavily on the technology-laden index.

The Dow Jones Industrial Average ended slightly lower.

The Philadelphia Semiconductor Index (.SOX) fell 4.1%, its largest single-day decline since December 22, 2022.

The telecommunications services sector (.SPLRCL) recorded its largest decline since February 3.

Shares of Alphabet Inc (GOOGL.O) fell after the company reported disappointing cloud services revenue, renewing fears of an economic slowdown.

Benchmark Treasury yields have resumed their upward trend, approaching the 5% level, raising concerns that interest rates may continue to rise.

“Earnings have been mixed, so that causes some headaches, but the real problem remains (Treasury) yields, which show no signs of weakening,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.

Yields on 10-year Treasury bonds rose after strong new home sales data and mortgage interest rates reached 23-year highs, raising fears of prolonged higher interest rates.

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“The US economy continues to show that it is on solid footing,” Detrick added. “That’s probably one of the main reasons why returns have been as strong as they have been.

“The bond market is sniffing out a potentially better economy in the future,” Detrick said.

The Dow Jones index fell 105.45 points, or 0.32%, to 33,035.93 points, the S&P 500 index lost 60.91 points, or 1.43%, to 4,186.77 points, and the Nasdaq Composite index fell 318.65 points, or 2.43%. To 12821.22.

Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, US on October 23, 2023. REUTERS/Brendan MacDiarmid/File Photo Obtaining licensing rights

Among the 11 major sectors in the S&P 500, communications services suffered the largest loss, while consumer staples (.SPLRCS) and utilities (.SPLRCU) finished modestly in the green.

It’s a crucial week for earnings, with nearly a third of companies in the S&P 500 expected to report third-quarter results.

So far, 146 have been reported from the S&P 500. Of those, 80% have delivered gains above expectations.

Analysts now expect S&P 500 earnings to grow year-over-year at 2.6% for the July-September period, up from 1.6% at the beginning of the month.

Microsoft stock (MSFT.O) advanced 3.1% after its better-than-expected quarterly report, which was released after the market closed on Tuesday.

The economically sensitive Dow Jones Transportation Average (.DJT) index touched its lowest level in more than four months after trucking company Old Dominion Freight Line (ODFL.O) reported earnings.

Shares of the trucking company fell 3.9%.

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Defense contractor General Dynamics shares rose four percent after it announced a jump in third-quarter revenue.

After the closing bell, IBM (IBM.N) and Meta Platforms (META.O) posted stronger-than-expected earnings, and their shares rose in extended trading.

Declining issues outnumbered advancing issues on the NYSE by a ratio of 3.61 to 1; On the Nasdaq, a 2.63-to-1 ratio favored losing stocks.

The S&P 500 has no new 52-week highs and 63 new lows; The Nasdaq Composite recorded 16 new highs and 500 new lows.

Trading volume on US stock exchanges reached 10.71 billion shares, compared to an average of 10.68 billion for the full session during the last 20 trading days.

Steven Kolb reports. (Additional reporting by Ankika Biswas and Shishwat Chauhan in Bengaluru – Prepared by Mohammed for the Arabic Bulletin) Editing by David Gregorio

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