4:12pm: First Republic Bank stock plummets again
The Dow closed Wednesday down 229 points, 0.7%, at 33,302, while the Nasdaq added 55 points, 0.5%, to 11.854 and the S&P 500 shed 16 points, 0.4%, to 4,056. The small-cap Russell 2000 index dipped 19 points, 1.1%, to 1,727.
Strong earnings from Microsoft and Alphabet kept the Nasdaq afloat, but sour sentiment caused by First Republic Bank led to a broader selloff. The regional banks saw shares drop another 33% a day after tumbling nearly 50% on Tuesday.
“Earnings have not been enough to catalyze the market higher,” said Ross Mayfield, investment strategy analyst at Baird. There were “a couple good reports out of the Big Tech names, but there was such a rally into their earnings season that I think you needed earnings to really clear a high bar to actually catalyze another leg higher. That just hasn’t been the case, especially when you have other headwinds pressing down on the market.”
More tech companies are expected to report results after the closing bell, including Meta and eBay.
12.05pm: Tech stocks buoyed by Microsoft and Alphabet results
US stocks were higher in noon trading as tech investors were fired up by better-than-expected financial results from Microsoft and Alphabet.
At midday, the Dow rose 14 points to 33,544, while the S&P 500 added 14 points at 4,086 and the tech-heavy Nasdaq gained 158 points to 11,957.
“Tuesday seemed to herald the beginning of a much bigger sell-off, but the numbers from Alphabet and Microsoft have steadied the ship for now,” IG chief market analyst Chris Beauchamp said.
“The question is now whether other big names this week can do the same, in which case equities might start May on the front foot,” he added.
Notable movers included shares of Chipotle Mexican Grill, Inc, which surged more than 13% after the restaurant chain reported better-than-expected quarterly earnings and revenue.
9:40am: Meta up next for Big Tech
The three major equities kicked off Wednesday in positive territory, with strong results from tech giants Microsoft and Alphabet boosting investor sentiment ahead of the release of Meta’s earnings after the closing bell.
Just after the market opened, the tech-heavy Nasdaq had added 116 points or 1% at 11,915 points, the S&P 500 was up 13 points or 0.3% at 4,084 points, and the Dow Jones was up 71 points or 0.2% at 33,602 points.
“While tech stocks are bounding higher, lingering banking concerns weigh on the broader S&P 500 and the Dow Jones,” noted FOREX.com market analyst Fiona Cincotta.
Following their earnings reports, Microsoft shares had jumped 7.2% to US$295.26 at the open while Alphabet was trading flat at US$104.65.
First Republic Bank, on the other hand, continued to tumble following its dismal earnings, down another 15.4% at US$6.85 after shedding about 50% at Tuesday's close.
Activision Blizzard shares had also fallen 9.5% to US$78.51 after the UK’s competition watchdog blocked Microsoft’s proposed $69 billion acquisition of the cloud gaming company.
7:50am: Tech stocks on the front foot
Wall Street is likely to open higher, led by shares of big tech companies after quarterly results from Microsoft and Alphabet beat expectations as their core businesses held up better than anticipated in the first three months of 2023.
Contracts for the Nasdaq-100 rose 0.7% in Wednesday pre-market trading, while futures for the Dow Jones Industrial Average (DJIA) and those for the broader S&P 500 index were less than 0.1% higher.
The main US benchmarks closed lower on Tuesday after results from First Republic Bank reignited concerns about the health of regional banks amid unprecedented deposit outflows. The DJIA ended 1% down at 33,531, the Nasdaq Composite fell 2% to 11,799 and the S&P 500 slid 1.6% to 4,072.
“Strong results from the tech sector after Wall Street had packed up and gone home for the day helped to steady nerves after renewed concerns about the banks,” commented AJ Bell investment director Russ Mould.
“Microsoft and Alphabet, two firms whose fates feel increasingly intertwined thanks to their competing AI search offerings, both demonstrated some resilience as their earnings came in ahead of forecasts," he added.
Microsoft’s cloud computing arm saw a better-than-expected growth rate of 16%, helping to dispel fears about a slowdown in spending as economic realities bite, Mould said, noting that talk of ‘healthy growth’ for the current quarter was like a vitamin pill for shareholders and helped the shares to big gains in after-hours trading.
Google’s search advertising business also returned to growth despite the difficult backdrop, speaking to the continuing importance of the platform to advertisers, Mould noted.
“The problems at First Republic Bank have undoubtedly reopened the sores from March, as investors fret about the financial system again, and while the big US banks largely impressed at the start of this earnings season, numbers from regional lenders … look set to be under heavy scrutiny in the coming days and weeks," he added.
Today, Facebook and Instagram owner Meta reports after the closing bell. Other companies reporting Wednesday include Boeing, American Tower Corporation, Boston Scientific, and Hilton Worldwide, among others.