Wall Street on Wednesday seesawed through the regular trading session to eventually end mixed, as a slump in industrial stocks and a surge in Treasury yields grappled with a historic post-earnings gain in Tesla (TSLA).
The first quarter earnings season has kicked into high gear with a deluge of reports from heavyweight names. All eyes are on Meta Platforms’ (META) numbers after the closing bell.
The tech-heavy Nasdaq Composite (COMP:IND) had earlier jumped nearly 1% after the start of regular trading, lifted by a massive advance in Tesla (TSLA). The electric vehicle giant’s stock saw its best reaction to a quarterly report since before the COVID-19 pandemic, after top boss Elon Musk touted new mass-market models and suggested that Tesla (TSLA) should now be valued as an artificial intelligence robotics company.
The tech-heavy index steadily gave up its gains after that and briefly slipped into the red before fluctuating through the afternoon. The Nasdaq (COMP:IND) finally closed 0.10% higher at 15,712.75 points. The benchmark S&P 500 (SP500) added 0.02% to settle at 5,071.63 points, while the blue-chip Dow (DJI) slipped marginally by 0.11% to conclude at 38,460.92 points.
Of the 11 S&P sectors, seven ended in the green.
Industrials topped the losers, sliding ~1%. Trucking and transportation stocks exerted a significant drag on the sector, continuing a recent pullback after disappointing quarterly reports from companies such as CSX (CSX), J.B. Hunt Transport Services (JBHT) and Old Dominion Freight Line (ODFL). Defense contractor General Dynamics (GD) also weighed on the sector after missing profit expectations.
Wednesday’s other major earnings-related moves: Hasbro (HAS) ended among the top percentage gainers on the S&P 500 (SP500), after the toy maker trimmed its quarter-end inventory and increased its profitability; Boeing (BA) erased earlier gains sparked by a better-than-feared quarterly loss, following a report that its effort to reacquire parts supplier Spirit AeroSystems (SPR) was getting bogged down; and drugmaker Biogen (BIIB) climbed after it said that the uptake for its Alzheimer’s therapy Leqembi was improving.
Favorably received earnings reports from other heavyweights on Monday and Tuesday had helped Wall Street end higher in back-to-back sessions and rebound from its worst week in over a year.
Turning to the fixed-income markets, Treasury yields were higher as investors dumped bonds, which in turn put pressure on equities. The move was driven by a combination of factors, including position squeeze, concerns following strong Treasury auctions recently and fresh conflict in the Middle East between Israel and Iran-backed Hezbollah in Lebanon.
The longer-end 30-year yield (US30Y) was up 5 basis points to 4.78%, while the 10-year yield (US10Y) was up 4 basis points to 4.65%. The shorter-end more rate-sensitive 2-year yield (US2Y) was up slightly to 4.94%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
“The market seems to be in a wait and see mood as other major companies are expected to report earnings soon. Most notably is Facebook parent Meta Platforms (META) … Although the increase seen by select companies has been positive so far, worries surrounding the timing and magnitude of interest rate cuts, combined with geopolitical concerns regarding places like Russia and Ukraine, as well as major parts of the Middle East, are likely preventing this excitement from taking the broader market higher,” Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha.
“In the event that financial data coming out from major companies over the next couple of weeks ends up being positive, it wouldn’t be surprising to see markets move to new highs. But for now, the market seems unsure as to whether or not that data will be robust enough to offset what are some legitimate worries,” Jones added.
Looking at Wednesday’s economic calendar, the docket was quite light. The most notable release was durable goods orders which rose more than expected in March. Wells Fargo said that weak shipments in the durable goods data posed a downside risk for U.S. Q1 GDP growth, the first estimate of which is due on Thursday.
