NEW YORK - US stocks tumbled in a broad sell-off on Wednesday 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 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 per cent, 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 per cent 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 per cent, to 33,035.93, the S&P 500 lost 60.91 points, or 1.43 per cent, to 4,186.77 and the Nasdaq Composite dropped 318.65 points, or 2.43 per cent, 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 per cent have delivered earnings above expectations.
Analysts now see S&P 500 year-on-year earnings growth of 2.6 per cent for the July-September period, up from 1.6 per cent at the beginning of the month.
Microsoft advanced 3.1 per cent 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 Line posted earnings.
The trucking firm’s shares fell 3.9 per cent. Defense contractor General Dynamics rose 4.0 per cent after reporting a jump in third-quarter revenue.
After the closing bell, IBM and Meta Platforms 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 favoured 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 US exchanges was 10.71 billion shares, compared with the 10.68 billion average for the full session over the last 20 trading days. REUTERS
