U.S. stocks fell on Wednesday, tech groups among the worst performers, as investors assessed the latest batch of corporate earnings and anticipated a crucial set of U.S. gross domestic product numbers later in the week.
Wall Street’s top-rated S&P 500 fell 1.1%, with 422 stocks down, according to Bloomberg data. The tech-heavy Nasdaq Composite fell 1.4% shortly after the New York open, eroding gains seen earlier this week.
The stock market moves came after Microsoft said projected revenue would reach between $50.5 billion and $51.5 billion in the current quarter, below analysts’ expectations. Shares of the company fell 3% early in Wednesday’s trading before paring some of its losses. Amazon fell 1.5% and Alphabet 3.6%, knocking the NYSE Fang+ index of Big Tech groups from its highest level since late September.
Tesla releases fourth-quarter numbers later on Wednesday, with analysts polled by Refinitiv expecting earnings of $1.01 per share on revenue of $24.03 billion, compared with earnings of 68 cents per share. share on $17.72 billion in revenue over the same period in 2021. Tesla shares have jumped a third so far in 2023, but their value has more than halved over the course of of the last 12 months.
Other companies enjoyed a rebound in January. Easing inflation data in the United States, “together with signs of cooling in the labor force and wages, is coming sooner than expected”, bolstering hopes that the Federal Reserve will suspend its hikes. interest rate earlier than expected, said Nomura analyst Charlie McElligott.
China’s reopening and Europe’s expected avoidance of a deep recession have led to an “upward reassessment of global growth at the same time”, he added. The Nasdaq Composite fell by a third in 2022, but is up more than 7.5% this year.
Some doubt how much time is left in this year’s rally. “The earnings season has not been remarkable so far and the latest strength sessions suggest that investors are speculating either that the season will turn good in the short term or that when the Fed increases [0.25 percentage points] next Wednesday earnings season won’t matter as there will be an outpouring of optimism and positivity at the end of the hiking cycle,” said Mike Zigmont, head of trading and research at Harvest Volatility. Management. “That’s a lot of play if you ask me.”
The end of the European Central Bank rate hike cycle is a more distant prospect. “Markets now see the ECB as the most active G10 central bank this year on policy tightening, with [1.4 percentage points] rate increases built into the curve,” said Derek Halpenny, head of research at MUFG. “For the Fed, the remaining tightening amounts to approximately [0.6 percentage points].”
US GDP figures released on Thursday will shed more light on the health of the world’s largest economy, with analysts expecting 2.6% growth in the three months to December, down from 3.2% growth in the previous quarter.
Long-term US government bonds sold off slightly as equities fell, with the yield on the benchmark 10-year bond rising 0.01 percentage point to 3.48%, after falling 3 .88% at the end of last year. The yield on the equivalent German Bund remained stable at 2.16%. Bond yields move inversely to prices.
A measure of dollar strength against a basket of six peers was flat on Wednesday. Prices for Brent, the international oil benchmark, rose 0.8% to $86.82 a barrel.
The regional Stoxx Europe 600 fell 0.3%, Germany’s Dax 0.1% and London’s FTSE 100 0.2%.
. microsoft lead tech stocks drop so investors expect news data economic us