Stocks got smoked on Wednesday as investors digested mixed earnings reports from Microsoft (MSFT) and Alphabet (GOOG, GOOGL) while Treasury yields pushed higher, putting more pressure on already strained tech stocks.
The Dow Jones Industrial Average (^DJI) fell a modest 0.3%, but the benchmark S&P 500 (^GSPC) tumbled almost 1.5% and the Nasdaq Composite (^IXIC) dropped nearly 2.5% in its worst day in eight months. The S&P 500 and Nasdaq closed at their lowest levels since May.
Alphabet shares slid more than 9% after the Google parent beat on earnings and revenue but fell short in its cloud business. By contrast, Microsoft stock was a rare bright spot for the market, as it popped 2% after its own double beat showed its bets on AI were paying off for its cloud segment.
Other megacaps lost ground as the mixed picture sapped some faith in Big Techs, which have powered gains in stocks this year. Amazon stock (AMZN) and Facebook parent Meta (META) — which reports results after the close Wednesday — were both down more than 4%.
Tech stocks have borne the brunt of pressure from surging Treasury yields, which rose again early Wednesday after stabilizing somewhat. The 10-year yield (^TNX) climbed above 4.9%, while the 30-year yield (^TYX) advanced above the 5% level.
Mixed tech earnings and rising bond yields put pressure on stocks as losses accelerated throughout the trading day on Wednesday.
The Dow Jones Industrial Average (^DJI) fell roughly 0.3%, while the S&P 500 (^GSPC) fell almost 1.4% and the Nasdaq Composite (^IXIC) dropped more than 2.4%. That marked the worst single-day performance for the tech-heavy Nasdaq since February.
The move lower pushed both the S&P 500 and the Nasdaq hovering around their 200-day moving averages, normally considered an area of support when the indexes are falling. After Wednesday, the Nasdaq officially entered correction territory, meaning it’s now fallen more than 10% from its recent high made on July 19.
Alphabet stock (GOOG, GOOGL) led the Yahoo Finance trending tickers page on Wednesday afternoon. Shares fell more than 9% on Wednesday after the company reported another sequential slowdown in cloud revenue during the third quarter.
Shares of Amazon (AMZN) fell more than 5% as well amid the warning sign for cloud spending and amid a broad market sell-off. Amazon was set to report quarterly earnings after the bell on Thursday.
The Nasdaq Composite (^IXIC) cracked the trending tickers page on Wednesday as the major index entered correction duty, meaning it has now fallen 10% from its previous highs. The index’s closely linked proxy, the Invesco QQQ Trust (QQQ), slumped more than 2% on Tuesday.
Microsoft (MSFT) was a rare outlier on Wednesday, rising roughly 3% after the company attributed a reemergence in its cloud growth to artificial intelligence.
Evercore ISI’s Julian Emanuel described the current earnings season as “a relative famine for positive earnings announcement price reactions” in a research note on Wednesday.
After 128 S&P 500 companies had reported entering Wednesday’s trading session, companies that beat expectations for both earnings per share and revenue have seen their stock rise 0.3% the next day. Over the past five years those companies would have seen a 1% move higher.
Misses are hurting more too. Companies that miss on both the top and bottom line are seeing their stocks fall nearly 5% the next day. Over the past five years, that move has been closer to 3.1% on average.
With stocks looking for a new catalyst to break out of their bond yield-driven sell-off, the market reactions to earnings aren’t going in investors’ favor.
“There’s real dispersion,” BlackRock’s global CIO Rick Rieder told Yahoo Finance Live when referencing Microsoft and Alphabet earnings. “We’re getting a series of conflicting signs around market. That’s why markets are so jumpy, so uncertain.”
After 22 days the the House of Representatives has a new speaker of the House. Rep. Mike Johnson (R-La.) was voted in on Wednesday and he has a plan that might help avoid another government shutdown.
Yahoo Finance’s Ben Weschkul explains:
Johnson will now lead negotiations with the Senate and White House on issues like a possible government shutdown next month and Biden administration proposals to spread new foreign aid around the world.
“The American people are looking to this great chamber to save America and save America we will,” House Republican Conference Chair Elise Stefanik said in a speech nominating Johnson for speaker on Wednesday afternoon.
When it comes to the looming shutdown, the 51-year-old Johnson has already sketched out a plan for the talks in a document distributed during his campaign. Johnson, who had been GOP conference vice chair, opened the door in that letter to a short-term measure to keep the government operating into 2024 past its current deadline of Nov. 17.
“I would propose a measure that expires on January 15 or April 15,” he wrote in his letter to colleagues leaving out key additional information such as what funding levels he would push for on a longer-term deal.
A preview of the Democrats’ view of Johnson came Wednesday morning from House Minority Leader Hakeem Jeffries, who told an audience of activists at the Center for American Progress IDEAS Conference that Johnson has a “pleasant demeanor” but that it belies a voting record “as extreme as the most extreme members of their conference with very few exceptions.”
The United Auto Workers are “edging closer” to a deal with Ford, according to the Associated Press.
The deal would end a six-week-long strike and includes a 25% general wage increase over the course of the new contract, per AP. The Big Three automakers had previously offered 23%.
According to AP, a Ford deal could be used to help broker deals with GM and Stellantis, too. All three stocks rose on the news.
The S&P 500 broke below its 200-day moving average at 4235 and fell lower than 4200 on Wednesday afternoon, a key level that stocks had held over the recent downturn.
In a research note on Monday, Truist co-CIO Keith Lerner noted that a dip below the 200-day moving average wouldn’t be a surprise.
“A temporary downside overshoot below this area would not be unusual, such as what occurred in March. The next support below this level for the S&P 500 is roughly 4050 (+/- 50 points),” Lerner wrote. “The 4050 area represents the April/May lows, roughly a 50% retracement of the uptrend seen since the lows of last October.”
For the day, the Dow Jones Industrial Average (^DJI) is down just more than 0.1%, while the S&P 500 (^GSPC) is off nearly 1.2% and the Nasdaq Composite (^IXIC) has fallen almost 2%.
Boeing (BA) shares are slightly above the flat line after the company cut its forecast for the popular 737 max.
Yahoo Finance’s Pras Subramanian reports:
For the quarter, Boeing reported top-line revenue of $18.10 billion, missing the Street’s estimate of $18.16 billion. The company reported an adjusted loss per share of $3.26, wider than the $2.95 loss expected. Boeing’s Q2 revenue figure was 13% higher than a year ago.
Boeing said results were impacted by “unfavorable defense performance and lower 737 deliveries.”
“We continue to progress in our recovery and despite near-term challenges, we remain on track to meet the financial goals we set for this year and for the long term,” said Boeing CEO Dave Calhoun in the earnings release. “We are focused on driving stability in our supply chain and improving operational performance as we steadily increase production rates to meet strong demand.”
Boeing said it now expects to deliver 375-400 737 Max jets this year, down from the 400-450 deliveries it projected earlier. Boeing plans for the 737 Max final assembly to rise to 38 planes per month by year-end, with a goal to reach 50 planes per month by 2025/2026.
Boeing identified a supplier issue that impacted production of the 737 Max, though it is not an immediate safety issue, the company said in a statement.
Boeing however maintained its 2023 free cash flow forecast of $3 billion-$5 billion, and operating cash flow of $4.5 billion-$6.5 billion.
Apple (AAPL) is raising the prices of some of its subscription services, including streaming platform Apple TV+, in the US and select international markets beginning Wednesday.
The company quietly announced the changes on its website, which revealed Apple TV+ will now cost $9.99, up from the prior $6.99. Apple TV+ originally cost $4.99 when it first launched in November 2019.
Apple Arcade and Apple News+ will each go up by $2 and $3, respectively, to $6.99 and $12.99.
As a result of the changes, Apple One, which bundles up to six Apple subscriptions for one monthly price, also saw its tiered prices increase.
The Individual plan will now cost $19.95 a month, up from $16.99, while the Family plan will be $25.95 — up from the prior $22.95. The Premier plan went up by $5 to a new monthly price of $37.95.
Existing subscribers will see these price increases 30 days later, on their next renewal date.
Apple raised the prices on a slew of its subscription services last year, hiking the monthly costs of Apple TV+, Apple One, and Apple Music. Wednesday’s announcement did not include price hikes to Apple Music or its fitness subscription plans.
“We are focused on delivering the best experiences possible for our customers by consistently adding high-quality entertainment, content, and innovative features to our services,” Apple said in a statement provided to Yahoo Finance.
Apple hikes prices on some subscription services
Alphabet (GOOGL) and Microsoft (MSFT) stocks are headed in opposite directions after reporting quarterly earnings on Tuesday night.
At the surface, Microsoft’s Intelligent Cloud surpassed Wall Street’s expectations while Alphabet’s cloud unit disappointed. But for investors, the focus remains on how artificial intelligence is driving growth within those businesses.
On the company’s earnings call Alphabet CEO Sundar Pichai said the company is seeing “a lot of interest in AI” for the cloud segment but revenue growth for the business area continued to slow down sequentially in Q3.
Meanwhile, at Microsoft, cloud revenue grew sequentially with management attributing 3 percentage points of growth directly to AI.
“Some of the improvements, we’re making in Azure and even in Microsoft 365 gross margins, even in the core of the commercial cloud, it speaks to the pace at which we are delivering AI revenue with the increasing cost expense and capital investment ahead with the demand we see,” Microsoft CFO Amy Hood told investors on an earnings call.
Both Microsoft and Google attributed increased capital expenditures to AI, but it was Microsoft’s ability to directly attribute revenue to AI that excited Wall Street analysts.
“The trend is now your friend,” wrote Evercore ISI’s Kirk Materne. “AI-Powered Azure acceleration highlights strong [fiscal first quarter] and the AI story only gets stronger in [the calendar year] 2024.”
Microsoft shares rose more than 4% on Wednesday morning while Alphabet declined more than 8%.
Stocks largely slipped on Wednesday as investors digested mixed earnings reports from Microsoft (MSFT) and Alphabet (GOOG, GOOGL), with more quarterly results set to flow in.
The Dow Jones Industrial Average (^DJI) popped more than 0.2%, while the S&P 500 (^GSPC) fell 0.6%, and the Nasdaq Composite (^IXIC) dropped more than 1%.
Alphabet shares slid more than 8% after the Google parent beat on earnings and revenue but fell short in its cloud business. By contrast, Microsoft stock popped almost 4% after its own double beat showed its bets on AI were paying off for its cloud segment.
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Stock market news today: Nasdaq, S&P 500 futures fall as Alphabet casts cloud – Yahoo Finance
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