The S&P 500 fell on Wednesday as large tech sectors suffered a blow by increasing Treasury yields, despite continuous quarterly results pointing to a better-than-expected earnings season.
In fact, the Dow Jones Industrial Average dropped 0.81%, or 134 points, while the Nasdaq dropped 1.1%. Also, the S&P 500 decreased by 0.79%.
Indeed, Big Tech, led by Google and Microsoft drove the market down. The yield on the 10-year Treasury shot up to 14-year highs on predictions that the Federal Reserve would likely continue raising interest rates aggressively.
In a note, Morgan Stanley predicted that the Fed would raise interest rates by 75 basis points in November, 50 basis points in December, and 25 basis points in January in order to combat continuing core inflation pressures.
Netflix’s spectacular third-quarter results, which surpassed expectations on both the top and bottom lines as subscriber growth resumed, helped to raise tech sentiment somewhat.
In the fourth quarter, Netflix added 2.4 million net members and forecast net additions of 4.5 million. This lead some on Wall Street to speculate that the company’s trend of customer losses was over.
While there will always be ebbs and flows in the slate, it’s now difficult to anticipate loss in future years, according to a note from Wells Fargo.
After the closing bell, International Business Machines is going to release its quarterly results for the technology sector. Many anticipate that it will highlight how big blue’s performance has been harmed by the slowing of enterprise investment and computer sales.
However, worries over slowing software expenditure were slightly allayed as Adobe Systems reiterated its third quarter revenue guidance, lifting its shares more than 2%.
Procter & Gamble Company, a major manufacturer of consumer goods, increased 1% as its quarterly results beat expectations on both the top and bottom lines. This obscured a reduced full-year revenue forecast and a knock from a stronger currency.
After the data revealed additional evidence of the housing industry weakening, homebuilder stocks put pressure on consumer discretionary equities, causing them to decline.
