Traders work on the floor of the New York Stock Exchange (NYSE) on January 18, 2022 in New York City.
Spencer Platt | Getty Images
The S&P 500 was steady on Wednesday, despite several strong earnings reports, as investors remain cautious on stocks amid elevated rates.
The Dow Jones Industrial Average fell about 50 points, despite a 4% jump in Procter & Gamble’s stock. The S&P 500 was flat. The technology-focused Nasdaq Composite fell 0.4% and now sits more than 10% from its most recent high in November.
Stocks were little-changed despite a slew of strong corporate earnings results. Elevated bond yields kept investors in check, after the U.S. 10-year Treasury yield topped 1.9% earlier on Wednesday, its highest level since December 2019.
Bank of America beat Wall Street estimates as it released pandemic-related loan loss reserves. Shares rebounded 2%, a day after sliding 3.4%. Other bank stocks, however, were in the red.
Morgan Stanley saw its stock rise 2% after the bank’s fourth-quarter profit topped estimates. It also experienced a 13% jump in equities trading revenue.
Procter & Gamble shares popped 4% after the consumer giant reported fiscal second-quarter earnings and revenue that topped Wall Street’s expectations. The company raised its outlook for sales growth.
“Higher inflation has raised concerns about input costs for many companies. Since [Procter & Gamble’s] margins were fine, this has relieved some of those concerns,” said Matt Maley, chief market strategist at Miller Tabak + Co.
UnitedHealth also rose 1.4% after beating on the top and bottom lines of its quarterly results.
Earnings season is picking up on Wall Street and so far the majority of companies have surpassed analyst expectations. Of the 44 S&P 500 companies that have reported quarterly results, nearly 73% have topped Wall Street’s expectations, according to FactSet.
On the negative side, home builders also were broadly lower following after KeyBanc downgraded the group on concerns over looming interest rate hikes that will drive up borrowing costs. KB Home lost 1.7%, Lennar fell 1.6% and D.R. Horton fell 1.7%.
Shares of Sony tumbled 3.8% the day after Microsoft said it is buying video game publisher Activision Blizzard for nearly $69 billion. Sony’s PlayStation competes with Microsoft’s Xbox consoles. The drop in Sony’s stock comes after shares slid 7.2% on Tuesday.
Surging bond yields spurred the sell-off in stocks on Tuesday. The 2-year Treasury rate — which reflect short-term interest rate expectations — topped 1% for the first time in two years.
On Tuesday, the Dow Jones Industrial Average lost more than 540 points, dragged down by a 7% drop in Goldman Sachs. The Wall Street bank missed analysts’ expectations for earnings as operating expenses surged 23%. Its shares recovered slightly on Wednesday.
The S&P 500 declined 1.8% on Tuesday. The Nasdaq Composite, full of interest rate sensitive technology stocks, was the relative underperformer, dipping 2.6%. The Nasdaq closed at its lowest level in three months as investors feared how quickly the Federal Reserve will hike interest rates.
The move, which comes after a market holiday in the U.S. Monday, indicated that investors are preparing for the possibility of more aggressive tightening by the Federal Reserve.
