Nasdaq Pulls Back Sharply Amid Negative Reaction To Tech Earnings
After closing sharply higher for three straight sessions, the major U.S. stock indexes went on a roller coaster ride over the course of the trading day on Wednesday.
The tech-heavy Nasdaq showed wild swings after an early sell-off before eventually ending the session down 228.12 points or 2.0 percent to 10,970.99.
The S&P 500 also slid 28.51 points or 0.7 percent to 3,830.60, while the narrower Dow inched up 2.37 points or less than a tenth of a percent to a new one-month closing high of 31,839.11.
The steep drop by the Nasdaq came amid a negative reaction to earnings news from tech giants Microsoft (MSFT) and Alphabet (GOOGL).
Shares of Microsoft tumbled by 7.7 percent after the software giant reported better than expected fiscal first quarter results but provided disappointing guidance.
Google parent Alphabet also plunged by 9.1 percent after reporting third quarter results that missed analyst estimates on both the top and bottom lines.
On the other hand, the slight uptick by the Dow came amid a strong gain by shares of Visa (V), with the credit card giant jumping by 4.6 percent after reporting better than expected third quarter results.
In economic news, the Commerce Department released a report showing new home sales in the U.S. pulled back sharply in September after unexpectedly skyrocketing in August, although the decrease was smaller than expected.
The report showed new home sales tumbled by 10.9 percent to an annual rate of 603,000 in September after soaring by 24.7 percent to a revised rate of 677,000 in August.
Economists had expected new home sales to plunge by 14.6 percent to a rate of 585,000 from the 685,000 originally reported for the previous month.
Sector News
Despite the pullback by the broader indices, tobacco stocks moved sharply higher on the day, driving the NYSE Arca Tobacco Index up by 6.3 percent to its best closing level in well over a month.
Substantial strength was also visible among oil service stocks, as reflected by the 4.8 percent spike by the Philadelphia Oil Service Index. The index shot up to a four-month closing high.
The rally by oil service stocks came amid a notable increase by the price of crude oil, with crude for December delivery surging $2.59 to $87.91 a barrel.
An increase by the price of gold also contributed to considerable strength among gold stocks, resulting in a 3.0 percent jump by the NYSE Arca Gold Bugs Index.
Biotechnology, telecom and transportation stocks also saw notable strength on the day, while retail, semiconductor and housing stocks moved to the downside.
Other Markets
In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.7 percent, while China’s Shanghai Composite Index advanced by 0.8 percent.
The major European markets have also moved to the upside over the course of the session. While the German DAX Index jumped by 1.1 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index rose by 0.6 percent and 0.4 percent, respectively.
In the bond market, treasuries extended the significant rebound seen in the previous session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, slid 9.3 basis points to 4.015 percent.
Looking Ahead
Earnings news may remain in focus on Thursday, with Facebook parent Meta Platforms (META) and Ford (F) among the companies releasing their quarterly results after the close of today’s trading.
Caterpillar (CAT), Comcast (CMCSA), Honeywell (HON) and McDonald’s (MCD) are also among the companies due to report their results before the start of trading.
Traders are also likely to keep an eye on the latest economic data, including reports on weekly jobless claims, durable goods orders and third quarter GDP.
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