U.S. stocks opened lower Wednesday as investors weighed another batch of U.S. earnings, including results from Morgan Stanley and International Business Machines Corp., while global government bonds yields rose after U.K. posted hotter-than-expected inflation.
How are stock indexes trading
The Dow Jones Industrial Average
dropped 136 points, or 0.4% to around 33,840
The S&P 500
lost 19 points, or 0.5% to about 4,136
The Nasdaq Composite
declined 75 points, or 0.6% to 12,079
On Tuesday, stocks struggled for direction, with the Dow falling 11 points, the S&P 500 eking out a 0.1% gain, and the Nasdaq Composite posting a marginal decline.
What’s driving markets
U.S. stock futures opened lower Wednesday after sticky double-digit inflation in the U.K. sparked selling of government bonds.
“You’ve got sovereign yields up across the world and that generally causes a risk-off mood in the equity markets,” Tavis McCourt, managing director of institutional equity strategy at Raymond James said in a call.
Still, with markets seemingly more relaxed of late about the trajectory of U.S. interest rates — the chances of the Federal Reserve increasing borrowing costs by 25 basis points in two weeks time is priced at 88% — trader attention currently is more focused on company profits.
The mixed start to U.S. first quarter corporate earnings season has left stocks struggling to extend their recent rally. The S&P 500 remains stuck within, though near the top, of the 3,800 to 4,200 range it has inhabited for about five months.
Minimal moves and a more relaxed mood saw the CBOE VIX index
a gauge of expected stock market volatility close below 17 on Tuesday, its lowest since January 2022.
“The market has been collecting a few duller days of late but it probably wouldn’t want to swap for those seen a month or so ago [when the banking crisis hit]. The last 24 hours fitted into that narrative with most major assets closing either side of unchanged,” said Jim Reid, strategist at Deutsche Bank.
“We did get several earnings releases to chew over, but they were pretty mixed overall and didn’t point to an obvious conclusion for investors, and it was much the same from yesterday’s limited round of data,” he added.
“This week we will have a better grip on earnings as the flow of corporate results makes its way on Wall Street. We note that the indices have had a solid run to the up side and could be headed for a slight pullback that we will not likely impact the longer term upward trend,” said Peter Cardillo, chief market economist at Spartan Capital.
“We therefore expect the near term trend to remain bullish, with the S&P 500 testing the 4250 area in the short term,” he added.
The Federal Reserve’s Beige Book of economic anecdote will be published at 2 p.m. Eastern and New York Fed President Williams is due to speak at 7 p.m.
Companies in focus
stock fell 1.5% Wednesday morning after the investment bank reported lower net income and revenue that beat consensus estimates.
Bed Bath & Beyond Inc.
stock jumped 25.7% Wednesday, as shares of the troubled home goods retailer continued their meme-like bounce. The rally was fueled by social-media speculation, according to retail trading platform Capital.com, which said that the bounce is not likely to last.
Western Alliance Bancorp
‘s stock rallied 16% Wednesday after the lender said it added $2 billion in deposits from March 31 to April 14.
United Airlines Holdings Inc.
shares gained 3.7% after the company on Tuesday forecast second-quarter and full-year per-share profit that were well above expectations, buoyed by continued strong travel demand around the globe.
Ally Financial Inc.
stock edged up 0.2% Wednesday morning. The auto and home lender said it expects 2023 retail auto originations to be on the lower end of its estimated low-$40 billion range because of “tightened underwriting.”
U.S. stocks traded lower on Tuesday as investors paid close attention to the upcoming earnings reports from big hitters Morgan Stanley and IBM.
The Dow Jones Industrial Average fell 97.90 points, or 0.4%, to 23,232.57, weighed down by a sharp drop in the shares of IBM and Goldman Sachs. The S&P 500 dropped 0.3% to 2,465.87 and the NASDAQ Composite Index posted a 0.4% loss, to 6,571.02.
Morgan Stanley reported better-than-expected quarterly numbers, however their stock was still down 3.2% after the news. Meanwhile, IBM posted a 2.1% fall as the company reported its 21st consecutive quarterly sales decline.
The earnings reports exacerbated investor unease due to the ongoing trade conflict between the U.S. and its trading partners. The news comes just days before the Federal Reserve will convene for its September policy meeting, raising expectations that the central bank will increase interest rates.
Overall, the major U.S. indices have recorded losses in recent months since the latest trade tensions. Investors remain hesitant to make big bets ahead of the policy meeting.
In foreign markets, Japan’s Nikkei 225 slid 0.9%, South Korea’s Kospi declined 0.2% and the Shanghai Composite Index fell 0.1%.