Get 40% Off
🚨 Volatile Markets? Find Hidden Gems for Serious OutperformanceFind Stocks Now

S&P 500 Edges Higher as Tech Reigns Supreme on Falling Bond Yields

Published 10/27/2021, 02:03 PM
Updated 10/27/2021, 02:59 PM
© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 edged higher Wednesday, as a jump in tech on falling U.S. bond yields and better-than-expected earnings from Microsoft and Google's Alphabet offset weakness in energy.

The S&P 500 rose 0.04%, though remained below its all-time high of 4,598.36. The Dow Jones Industrial Average slipped 30%, or 106 points, while the Nasdaq was up 0.8%.

Technology was lifted by the fall in Treasury yields, with the 10-year yield dropping below 1.6%, while a climb in Microsoft and Alphabet also supported the sector.

Alphabet (NASDAQ:GOOGL)'s third-quarter earnings beat was driven by strong performance in its digital advertising search business, which was less vulnerable to Apple (NASDAQ:AAPL)'s privacy changes. Its share price was up 6%.

"Search [was] the clear beneficiary from Apple's ATT [App Tracking Transparency], and the least exposed to mobile tracking and measurement issues," Wedbush said in a note.

Microsoft (NASDAQ:MSFT) delivered fourth-quarter guidance that topped expectations as its cloud business Azure continued to impress, growing more than 50% in the third quarter. Its shares were up about 4%.

Twitter (NYSE:TWTR) plunged 10% after reporting third-quarter earnings that fell short of Wall Street estimates.

The upside in the tech offset weakness in cyclicals as energy and financials stumbled.

Energy fell more than 1% as oil prices were pressured by expectations for a jump in global crude supplies from Iran as Tehran and European Union agreed to resume talks on to revive the 2015 nuclear deal before month-end.

Oil prices were also pushed lower by data showing a larger than expected build in the U.S. weekly crude stockpiles.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

Crude inventories rose by 4.3 million barrels for the week ended Oct. 24, well above analysts' expectations for a build of 1.9 million barrels.

Energy, which up about 16% year to date, likely has further room to run.

“I'm bullish on energy as underinvestment in energy projects should continue to support the supply and demand imbalance, substantially pushing crude prices higher,” Aptus Capital Advisors portfolio manager David Wagner told Investing.com in a recent interview.

“When you couple that with energy firms’ plans of returning capital shareholders, I just don’t see energy as being an underperformer,” Wagner added.

Financials were dragged lower by a 7% slump in Capital One Financial (NYSE:COF) as the payment company's better-than-expected results were offset by concern over rising expenses amid a ramp-up in marketing spend.

Still, Wall Street analysts remained constructive on the Capital One, forecasting the ramp-up in marketing to lead to further growth.

"We view [higher marketing expenses] as positive driver future growth and a sign that management is becoming more confident in the outlook, though it is a near-term expense headwind," RBC said in a note.

Falling banking stocks also weighed on financials as Treasury yields slipped as yield curve continued to flatten.

Boeing (NYSE:BA), meanwhile, fell 1% after third-quarter results fell short estimates as the rebound in 737 Max demand was offset by production delays of its 787 Dreamliner jets as the aircraft manufacturing continues to address manufacturing flaws.

On the economic front, durable goods orders for September were better than expected amid smaller than expected decline in aircraft and autos orders.

3rd party Ad. Not an offer or recommendation by Investing.com. See disclosure here or remove ads .

"Headline durable goods orders were depressed by declines in the civilian aircraft and autos components, but both were smaller than we expected. Behind the headline noise, the 0.8% jump in core capital goods orders - the biggest since June - is very encouraging," Pantheon Macroeconomics said in a note.

Latest comments

yes, edges higher. Only if you are a bat staring at the screen.
'U.S. Holiday-Spending Plans Tempered by Inflation, Survey Shows"...cost of living up, inflation 5.4%, supply chain issues, housing price bubble, millions out of work, gas prices up, etc...meanwhile Wall Street at all time highs. There is a reason that Occupy Wall Street and BLM started under Obama. Leftists love self-harm and is why they keep voting for their DNC cult masters. We have not had oil and food prices this high since Brandon was VP.
Tanking. update headline. also.. Let's go Brandon.
You mean the S&P is getting ready to crash 50%
Advertising! The cornerstone of the American economy!
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.