Wall Street grappling with a batch of corporate earnings sent stocks lower on Wednesday, with traders also keeping a close eye on the Treasury market for clues on the outlook for interest rates and the economy.
The S&P 500 fell for the sixth time in seven days. The tech-heavy Nasdaq 100 underperformed as Google’s parent Alphabet Inc.’s disappointing cloud figures outweighed optimism with Microsoft Corp.’s strong sales.
The Dow Jones Industrial Average edged higher as Boeing Co. maintained its cash-flow target and said it’s moving ahead with higher aircraft output.
Investors are looking for evidence on how companies are coping with high interest rates and whether consumer spending is changing because of inflation.
Meta Platforms Inc., the parent company of Facebook, is set to report later Wednesday, with Amazon.com Inc.’s results due Thursday.
“Tech earnings got off to a mixed start thanks to a focus on cloud computing, one of the big money spinners for the sector,” said Chris Beauchamp, chief market analyst at IG Group.
“It’s now up to Meta tonight and Amazon tomorrow to provide the kind of good news that might give stocks a reason to rally into month-end.”
In fixed income, longer-dated US government rates outpaced those in shorter-maturity securities – a process known as “bear steepening.”
Treasury 30-year yields climbed nine basis points to 5.02% while those on two-year notes fell three basis points to 5.08%.
Economists often look to the Treasury market for clues about when a recession might come. Specifically, they examine the so-called yield curve.
When it’s “inverted,” as it has been since about mid-2022, that almost always means a U.S. recession is looming.
But by mid-2023, the curve began to “disinvert” – or steepen in industry parlance – in a way that raised the question of whether the U.S. had managed to dodge a recession or whether one was about to start.