NEW YORK: US stocks tumbled in a broad sell-off on Wednesday (Oct 25) as Alphabet shares slid after the Google parent posted disappointing earnings and as US Treasury yields rose, reviving fears that interest rates could stay higher for longer.
The Dow fell 105.45 points, or 0.32%, to 33,035.93, the S&P 500 lost 60.91 points, or 1.43%,
to 4,186.77 and the Nasdaq Composite dropped 318.65 points, or 2.43%, to 12,821.22.
The benchmark S&P 500 index notched its fifth daily decline in six to close below the closely watched 4,200 level. The Nasdaq Composite slumped to its biggest single-session percentage drop since Feb 21, with interest rate sensitive megacaps weighing heavily the tech-laden index.
The Philadelphia SE Semiconductor index plummeted 4.1%, its biggest one-day plunge since Dec 22, 2022.
The Communication Services sector posted its largest percentage decline since Feb 3.
Shares of Alphabet Inc plunged after the company reported disappointing cloud services revenue, reviving fears of an economic slowdown.
Benchmark Treasury yields resumed their upward drift, edging closer to the 5% level, feeding fears high interest rates could linger.
“Earnings have been a mixed bag, and that’s causing some headaches but the real issue remains (Treasury) yields, which are showing no signs of weakening,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
Yields on 10-year Treasury notes rose after robust new home sales data and mortgage rates reaching 23-year highs stoked fears of prolonged elevated rates.
“The economy in the US continues to show it’s on strong footing,” Detrick said. “That is likely one of the main reasons yields have been as strong as they’ve been.
“The bond market is sniffing out a potentially better economy down the road,“ he said.
It is a momentous week for earnings, with nearly one-third of the companies in the S&P 500 expected to post third-quarter results.
So far, 146 of the S&P 500 have reported. Of those, 80% have delivered earnings above expectations.
Analysts now see S&P 500 year-on-year earnings growth of 2.6% for the July-September period, up from 1.6% at the beginning of the month.
Microsoft advanced 3.1% following its better than expected quarterly report, issued after the market closed on Tuesday.
After the closing bell, IBM and Meta Platforms posted earnings that were stronger than expected, and their shares climbed in extended trading. – Reuters