It’s a day of risk aversion on Wall Street as investors are shedding both stocks and bonds in favor of cash while digesting the latest corporate earnings reports.
As of midday trading in New York, all major U.S. stock indices were in negative territory, primarily due to a slump in the tech sector that had a broad impact on the market’s performance.
Despite reporting better-than-expected results, Alphabet, Inc. GOOGL GOOG faced challenges in its Cloud revenue growth, resulting in a significant 9% daily decline in its stock price — the most substantial daily drop in a year.
Meta Platforms, Inc. META saw a nearly 3.2% decline ahead of its quarterly earnings release scheduled after the market closes. Conversely, Microsoft Corp. MSFT ‘s shares surged by 3.9% following stronger-than-predicted quarterly results.
Equity investor sentiment remained depressed as both oil prices and Treasury yields experienced increases. Market participants are anxiously awaiting the release of key GDP growth data scheduled for Thursday, which is expected to show a robust 4.3% increase.
Cues From Thursday's Trading:
The S&P 500 fell 1.2%, falling below the 4,200 support and extending the decline since July’s peak to 9%.
The Nasdaq 100 sharply underperformed, down 2%. Blue chips managed to contain losses, while small caps suffered a 1.4% drop.
US Index Performance On Tuesday
| Index | Performance (+/-) | Value |
| Nasdaq 100 | -2.00% | 14,450.18 |
| S&P 500 Index | -1.18% | 4,197.34 |
| Dow Industrials | -0.31% | 33,113.22 |
| Russell 2000 | -1.36% | 1,656.68 |
Analyst Color:
Weighing in on the current market fundamentals, John Lynch, chief investment officer at Comerica, said the equity market will likely continue to experience volatility until clarity emerges on the geopolitical front and corporate profits begin to support recent price gains.
The analyst sees the benchmark U.S. 10-year Treasury yield stabilizing in the 4.75%-5% range as “global investors balance supply concerns with the need to seek yield and safety in these challenging times.” As a result, the U.S. dollar will also likely firm slightly above the current levels, he said.
From a technical perspective, the analyst noted that the S&P 500 has been weakening since late July, down about 8% from the year-to-date high. If the index breaks below its 200-day moving average, the next support could be in the 4,000-4,050 range.
Premising on better-than-expected results that will likely provide the equity markets with “fundamental ballast,” Lynch said the index would be fairly valued in the 4,400 range by the year-end.
Thursday’Trading In Major US Equity ETFs
- The SPDR S&P 500 ETF Trust SPY was 1.2% lower to $418.38.
- The SPDR Dow Jones Industrial Average ETF DIA was 0.2% lower to $330.90.
- The Invesco QQQ Trust QQQ fell 2% to $351.88, according to Benzinga Pro data.
Looking at S&P 500 sector ETFs:
- The Consumer Staples Select Sector SPDR Fund XLP was the outperformer, up 0.4%.
- The Communication Services Select Sector SPDR Fund XLC was the laggard, down 3.6%, pressured by sharp declines from Alphabet and Meta Platforms.
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Stocks In Focus:
- Texas Instruments, Inc. TXN moved down 4.3% following its quarterly results.
- Waste Management Inc. WM climbed over 5% following its quarterly results.
- MarketAccess Holdings Inc. MKTX and Automatic Data Processing Inc. ADP fell 12% and 9%, respectively, after their quarterly results.
- Companies reporting after the close include Canadian Pacific Kansas City Limited CP, Edwards Lifesciences Corporation EW, International Business Machines Corporation IBM, KLA Corporation KLAC, Mattel, Inc. MAT, Meta Platforms and O’Reilly Automotive, Inc. ORLY.
Commodities, Bonds, Other Global Equity Markets:
Crude oil rose 1%, with a barrel of WTI-grade crude trading at $84. The United States Oil Fund ETF USO was 1.1% higher to $77.78.
Treasury yields were sharply higher, with the 10-year yield up by 10 basis points to 4.94% and the 30-year yield up by 13 basis points to 5.28%. The iShares 20+ Year Treasury Bond ETF TLT was 2.3% lower for the day.
The dollar rose, with the U.S. dollar index, which is tracked by the Invesco DB USD Index Bullish Fund ETF UUP, up 0.2%. The EUR/USD pair, which is tracked by the Invesco CurrecyShares Euro Currency Trust FXE, was 0.2% lower to 1.0570.
European equity indices had a negative session. The SPDR DJ Euro STOXX 50 ETF FEZ fell 0.6%.
Gold edged 0.4% up to $1,977/oz, while silver fell 0.5% to $22.80. Bitcoin BTC/USD was 1.7% higher to $34,495.
Staff writer Piero Cingari updated this report midday Thursday.
Photo via Shutterstock.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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