Volatility grips stocks affected by tech losses: Markets wrap

(Bloomberg) — Volatility took over US stocks on Wednesday as investors grappled with losses from big tech companies after a batch of lackluster earnings underlined how Fed tightening is affecting the economy.

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The tech-heavy Nasdaq 100 pared losses above 2% earlier in the session, while the S&P 500 fluctuated. Microsoft Corp. was the most down since March 2020 after its earnings highlighted the impact of the dollar’s rally. Alphabet Inc. also declined. , the parent company of Google, after it provided poor earnings. Meta Platforms Inc. and Amazon.com Inc. and Apple Inc. Among the major companies still reporting this week.

Treasury yields fell after data showed the US goods trade deficit widening. US new home sales fell in September, another indication that the economy is starting to see the effects of a sharp Fed rate hike. The dollar scale fell for a second day to its lowest level in three weeks.

Stocks have rebounded in recent days on mostly solid earnings and speculation that the Federal Reserve may limit the pace of interest rate increases. About a quarter of S&P 500 companies reported third-quarter results, with more than two-thirds exceeding analyst estimates despite the significant technology setback. But investors remain concerned that the slowdown in production will affect corporate earnings in the coming months.

“This has been a tough year for stocks as investors try to assess what it means to solve a long period of easy money for valuation,” Megan Hornman, chief investment officer at Verdence Capital Advisors, wrote in a note. “In addition, it has been difficult for companies to absorb the stubbornly high inflation environment, and we are starting to see the negative spillover in margins falling back from record highs.”

Strategic analysts at Goldman Sachs Group Inc. The conditions for lower US equities are yet to emerge as the asset class does not fully reflect the recent rise in real yields and the potential for a recession. In the event of a severe economic slowdown, the Goldman team said it expects the S&P 500 to fall to 2,888, which would mean a 25% drop from Tuesday’s close.

Meanwhile, the British pound held up after the government said the long-awaited financial statement would be pushed back until November. The pound rose earlier after the new prime minister, Rishi Sunak, appointed an experienced government to lead the UK through what he called a “deep economic crisis”.

Gold rose as lower Treasury yields supported the precious metal. Bitcoin rose for the second day.

This week’s main events:

  • Earnings due this week include: Apple, Exxon Mobil, Ford Motor, Credit Suisse, Airbus, Amazon, Bank of China, Boeing, Caterpillar, Cnooc, Intel, McDonald’s, Merck, Samsung Electronics, Shell, Vale and Volkswagen

  • European Central Bank rate decision, Thursday

  • US GDP, Durable Goods Orders, Initial Jobless Claims, Thursday

  • Bank of Japan policy decision, Friday

  • US personal income, personal spending, pending home sales, University of Michigan consumer confidence, Friday

Some of the main movements in the markets:

Stores

  • The S&P 500 was little changed as of 10:28 a.m. New York time

  • The Nasdaq 100 is down 1.2%.

  • The Dow Jones Industrial Average rose 0.6%

  • The Stoxx Europe 600 Index is up 0.2%.

  • The MSCI Global Index is up 1.6%.

coins

  • Bloomberg spot dollar index down 0.6%.

  • The euro rose 0.6 percent to $1.0028

  • The British pound rose 0.9 percent to $1.1573

  • The Japanese yen rose 0.9% to 146.60 per dollar

Cryptocurrency

  • Bitcoin rose 3.1% to $2,0813.7

  • Ether rose 6.7 percent to $1572.7

bonds

  • The yield on the 10-year Treasury fell seven basis points to 4.03%.

  • Germany’s 10-year yield fell four basis points to 2.13%.

  • The yield on British 10-year bonds fell six basis points to 3.57%.

goods

  • West Texas Intermediate crude rose 1.9% to $86.90 a barrel

  • Gold futures rose 1% to $1,674 an ounce

Assisted by Allegra Catelli, Abigail Moses, Robert Brand and Vildana Hajrick.

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