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S&P 500, Nasdaq end sharply lower as Alphabet disappoints, Treasury yields bounce

Published Oct 25, 2023 06:07AM ET Updated Oct 25, 2023 07:58PM ET
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© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 23, 2023. REUTERS/Brendan McDermid/File Photo
 
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By Stephen Culp

NEW YORK (Reuters) - U.S. stocks tumbled in a broad sell-off on Wednesday as Alphabet (NASDAQ:GOOGL) shares slid after the Google parent posted disappointing earnings and as U.S. Treasury yields rose, reviving fears that interest rates could stay higher for longer.

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 Dow Jones Industrial Average finished modestly lower.

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 U.S. continues to show it’s on strong footing," Detrick added. "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," Detrick said.

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.

Among the 11 major sectors in the S&P 500, communications services had the largest percentage loss, while consumer staples and utilities ended modestly green.

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 (NASDAQ:MSFT) advanced 3.1% following its better than expected quarterly report, issued after the market closed on Tuesday.

The economically sensitive Dow Jones Transport Average index touched its lowest in more than four months after trucking firm Old Dominion Freight (NASDAQ:ODFL) Line posted earnings.

The trucking firm's shares fell 3.9%.

Defense contractor General Dynamics (NYSE:GD) rose 4.0% after reporting a jump in third-quarter revenue.

After the closing bell, IBM (NYSE:IBM) and Meta Platforms (NASDAQ:META) posted earnings that were stronger than expected, and their shares climbed in extended trading.

Declining issues outnumbered advancing ones on the NYSE by a 3.61-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.

The S&P 500 posted no new 52-week highs and 63 new lows; the Nasdaq Composite recorded 16 new highs and 500 new lows.

Volume on U.S. exchanges was 10.71 billion shares, compared with the 10.68 billion average for the full session over the last 20 trading days.

S&P 500, Nasdaq end sharply lower as Alphabet disappoints, Treasury yields bounce
 

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Comments (10)
Daniel Cosma
Daniel Cosma Oct 26, 2023 3:10AM ET
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What next ? Who will buy US Bonds when you see the overwhelming level of debts ? Is there much better than to invest in US companies ?
Kerry Ditto
Kerry Ditto Oct 26, 2023 12:05AM ET
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stocks for the short run are positive . forget the long run, we'll be all dead.
dylan mulvaney
dylan mulvaney Oct 25, 2023 3:24PM ET
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"U.S mortgage rates soar to highest in more than 23 years"
Niels Jorgen
Niels Jorgen Oct 25, 2023 3:20PM ET
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Ya well these “signs” only work sometimes because of robots and that people use them to predict something… also like the guy said new territory
Daniel Cosma
Daniel Cosma Oct 25, 2023 2:54PM ET
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Narrative of this bloody day:  It is the end of the glory for the champion Nasdaq. It will never recover from these looses, never. Do not invest in US shares anymore. Keep selling like mad. Sell until all that stuff value reaches0$ and then perhaps you might buy something !! The entire world will collapse soon and it will be very nicely orchestrated.  Just wait and see. No resilience anymore. Is this clear ?
MarketRoller CoasterRider
MarketRoller CoasterRider Oct 25, 2023 2:54PM ET
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I don't see the big deal with an inverted yield curve. The pandemic introduced uncharted area. After it ended, there has been extremely enthusiastic consumer activity paired with supply shortage which caused inflation to skyrocket. This, in turn caused the interest rate to skyrocket (although not as much). So we currently have suddenly high interest rates to bring inflation under control but it will come back down when inflation comes under control. Then the rates will come back down. I am not surprised that financial institutions are not going to guarantee long-term interest rates for your investment because it has spiked up in the relatively short term. Why would they want to be stuck paying investors high rates for long term risk free.
Weeping Angel
Weeping Angel Oct 25, 2023 2:17PM ET
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Here we go. The perma bears who don’t understand that we have an INVERTED YIELD CURVE and that tech stocks make up 60-70% of the SP500 price. With continuing raising interest rates as Powell has continued to allude to. What’s wrong with you? You think market will go up forever? Seek therapy.
Weeping Angel
Weeping Angel Oct 25, 2023 2:17PM ET
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*perma bulls I mean.
First Last
First Last Oct 25, 2023 2:17PM ET
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"You think market will go up forever?"  --  That has been the long-term, multi-decades trend.
lms0229 Shannon
lms0229 Shannon Oct 25, 2023 1:59PM ET
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makes zero sense the markets have fallen....
Luca Giardina
Luca Giardina Oct 25, 2023 1:58PM ET
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Here we go again.. Some big guy decided markets have to go down.
John Stanton
John Stanton Oct 25, 2023 1:48PM ET
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Cool narrative
 
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