Equities Close Lower as Rise in Yields Overshadows Earnings
- U.S. 10-year Treasury yield hits highest since July 2008
- Netflix jumps after reversing customer losses
- Procter & Gamble, Travelers post upbeat earnings
- PHLX Housing Index falls on weak U.S. housing data
- $Dow Jones Industrial Average(.DJI.US$ down 0.33%, $S&P 500 Index(.SPX.US$ down 0.67%, $Nasdaq Composite Index(.IXIC.US$ down 0.85%
- Netflix jumps after reversing customer losses
- Procter & Gamble, Travelers post upbeat earnings
- PHLX Housing Index falls on weak U.S. housing data
- $Dow Jones Industrial Average(.DJI.US$ down 0.33%, $S&P 500 Index(.SPX.US$ down 0.67%, $Nasdaq Composite Index(.IXIC.US$ down 0.85%
U.S. stocks snapped a two-day streak of gains on Wednesday as weakness in shares of $Abbott Laboratories(ABT.US$ and a rise in Treasury yields sapped momentum from the current earnings season and outweighed a surge in $Netflix(NFLX.US$ shares.
The yield on the 10-year U.S. Treasury note touched its highest level in more than 14 years as soft housing data did little to alter expectations the Federal Reserve will remain aggressive in hiking interest rates as it attempts to wrestle down stubbornly high inflation.
The rise in yields weighed on rate-sensitive names like real estate stocks, down 2.56% as the worst-performing S&P sector on the day, and megacap growth names such as $Microsoft(MSFT.US$ and $Amazon(AMZN.US$. Energy was the sole S&P sector to end the session in positive territory with a gain of 2.94%.
$Abbott Laboratories(ABT.US$ tumbled 6.5% after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China.
$Abbott Laboratories(ABT.US$ tumbled 6.5% after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China.
$Netflix(NFLX.US$ shares, however, jumped 13.1% as the best perfomer operformerP 500 after it attracted 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and guided for 4.5 million additions by year-end.
Fed officials have largely been in sync in their public comments about the need to be aggressive in raising rates to tackle inflation. On Wednesday, Federal Reserve Bank of Minneapolis President Neel Kashkari said job market demand remains strong and underlying inflation pressures probably have not peaked yet.
The Fed's "Beige Book" survey of economic activity showed firms noted price pressures remained elevated, although there was some easing in several districts, while the labor market showed some signs of cooling.
The U.S. central bank is widely expected to raise rates by 75 basis points for the fourth straight time at its November meeting.
The Fed's effect on the housing market continues to grow. Housing starts, a measure of new residential construction, dropped 8.1% in September in the latest sign of the economy losing steam.
The PHLX Housing Index stumbled -4.50%, marking another sector unlikely to help stocks reverse months of declines, with the three main U.S. indexes still mired in bear markets.
Dow components $Procter & Gamble(PG.US$ gained 0.93% and $The Travelers Companies(TRV.US$ rose 4.44% after the companies posted better-than expected quarterly profit.
Third-quarter profit growth expectations for S&P 500 companies have edged up to 3% from 2.8% on Tuesday, according to Refinitiv data, still well below the 11.1% increase forecast at the start of July.
$Tesla(TSLA.US$ advanced 0.84% ahead of its earnings after the bell, with focus on any weakness in demand that is starting to weigh on the auto industry. Shares dropped 3.94% following the close as the electric vehicle maker missed revenue estimates for the third quarter.
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