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NEW YORK (AP) — Tech stocks are lower Wednesday as some of Wall Street’s most influential stocks feel the downside to sky-high expectations.
The S&P 500 was down 0.5% in early trading. As of 9:40 a.m. ET, the Nasdaq Composite Index was the market leader, down 1.1% as big tech stocks fell. The Dow Jones Industrial Average, which is less heavily focused on tech stocks, was an outlier, rising 110 points, or 0.3%.
Alphabet, one of the most heavily weighted companies in the market, fell 6.2% despite reporting that its latest quarter’s profit and revenue beat analysts’ expectations. Analysts pointed to some worrying trends behind the scenes in that amount. Google’s parent company I earn money from advertising.
But the bigger challenge may be that the company is battling high expectations after its stock soared last year, far outpacing the rest of the market. Other big tech stocks that similarly accounted for a disproportionate share of the S&P 500’s record rally Wednesday also struggled in the face of lofty expectations.
microsoft The stock rose 0.4% after falling into a temporary loss despite delivering better-than-expected profits and revenue. Dan Ives, one of Wedbush Securities’ analysts, even called the quarterly report “a masterpiece that should hang in the Louvre.”
teslaAnother stock in a group of stocks known as the Magnificent Seven fell 1.6%. A Delaware judge ruled a day earlier that Tesla CEO Elon Musk is not entitled to a landmark compensation package given to him by Tesla that could potentially be worth more than $55 billion. .
The Magnificent Seven was responsible for much of the S&P 500’s returns last year, and on Thursday three more companies are scheduled to report their latest quarterly results: Amazon, Apple and Meta Platforms. I have high expectations for them.
Although Advanced Micro Devices is not a member of the Magnificent Seven, we benefit from many of the same trends. Earnings for the most recent quarter were in line with analysts’ expectations, and sales fell 4.8%, even though they slightly beat analysts’ expectations. The company’s sales forecast for the next quarter was lower than analysts’ expectations.
Elsewhere on Wall Street, stock prices were seeing some gains as bond market yields eased.
Lower yields mean less pressure on the economy and financial system, while also encouraging investors to pay higher prices for stocks. Prices have been generally declining since autumn due to expectations that the cooling down in inflation will push up inflation. federal reserve It plans to cut interest rates several times this year.
The Federal Reserve is scheduled to announce its latest decision on interest rates in the afternoon, and there is a widespread expectation that key interest rates will remain unchanged. There are hopes that it could provide a hint as to when interest rates will start to be cut later this year.
Several reports Wednesday morning may have prompted Fed officials to consider an early start.
According to one report, US worker pay and benefits Growth in the final three months of 2023 was slower than economists expected. All workers want bigger raises, but the colder-than-expected statistics are one of the Fed’s big concerns that wage increases that are too large will eventually trigger a vicious cycle that keeps inflation high. may help alleviate the
A separate report from the ADP Institute also suggested that hiring by non-government employers was weaker in January than economists expected. The Fed and Wall Street are hoping the job market will cool enough to keep inflation in check, but not enough to cause a recession.
The yield on the 10-year U.S. Treasury note fell to 3.96% from 4.04% late Tuesday.
In overseas stock markets, indexes plunged again amid continued concerns about China’s slowing economic recovery and the plight of the country’s heavily indebted real estate developers.
Stocks were also mixed in other parts of Asia and Europe.
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Associated Press writer Zimo Zhong contributed.
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