December 9, 2022

Stocks closed lower as higher returns outweighed profits

Stocks closed lower as higher returns outweighed profits

  • The 10-year US Treasury yield is at its highest level since July 2008
  • Netflix jumps after reversing customer losses
  • Procter & Gamble, travelers post upbeat earnings
  • PHLX housing index down on weak US housing data
  • Dow Jones down 0.33%, Standard & Poor’s 500 down 0.67%, Nasdaq down 0.85%

NEW YORK (Reuters) – U.S. stocks snapped a two-day winning streak on Wednesday as Abbott Laboratories stocks weakened. (ABT.N) Rising Treasury yields exhausted momentum from the current earnings season and outpaced the increase in Netflix Inc (NFLX.O) Involved.

The US 10-year Treasury yield touched its highest level in more than 14 years as weak housing data did little to change expectations that the Federal Reserve would remain aggressive in raising interest rates as it tries to combat stubbornly high inflation.

Rising yields weighed on price-sensitive names such as real estate (.SPLRCR) Stocks, down 2.56% as the worst-performing S&P sector today, and huge growth names like Microsoft Corp (MSFT.O) and Amazon.com Inc (AMZN.O). energy (.SPNY) The S&P sector was the only one to end the session in positive territory with a gain of 2.94%.

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Abbott Laboratories fell 6.5% after reporting less-than-expected growth in international medical device sales, weighed down by a stronger dollar and supply challenges in China.

However, Netflix shares jumped 13.1% as the top P 500 fragrance operator after attracting 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and targeting 4.5 million additions by the end of the year.

“Bonds are weighing heavily on them… It’s a shame to see good earnings lost,” said JJ Kinahan, CEO of IG North America in Chicago.

“At the end of the day, dividends drive stocks, but when they’re beat, it’s hard to have that optimism, but ultimately good earnings will drive stocks higher, it’s a question of how much the macroeconomic picture continues to hurt those earnings.”

Dow Jones Industrial Average (.DJI) It fell 99.99 points, or 0.33%, to 30423.81 Standard & Poor’s 500 (.SPX) It lost 24.82 points, or 0.67%, to 3,695.16 points, and the Nasdaq Composite (nineteenth) It fell 91.89 points, or 0.85%, to 10,680.51 points.

Federal Reserve officials have been largely in sync in their public comments about the need to be assertive in raising interest rates to tackle inflation. On Wednesday, Minneapolis Federal Reserve Bank of Minneapolis President Neil Kashkari said labor market demand remains strong and that underlying inflation pressures may not yet peak.

The Fed’s “Beige Book” survey of economic activity showed that companies noted that price pressures remained high, although there was some reversal in many areas, while the labor market showed some signs of calming.

The US central bank is widely expected to raise interest rates by 75 basis points for the fourth consecutive time at its November meeting.

The Fed’s impact on the housing market continues to grow. Housing starts, a measure of new residential construction, fell 8.1% in September in the latest sign of the economy losing steam.

Housing Beginnings Building Permits

PHLX Housing Index (.HGX) It tumbled -4.50%, indicating that another sector is unlikely to help stocks reverse months of declines, as the three major US indexes remain mired in bear markets.

Shares of Procter & Gamble, a component of Dow, rose 0.93% and Travelers Companies Inc. (TRV.N) It rose 4.44% after companies reported better-than-expected quarterly earnings.

Expectations for third-quarter earnings growth for S&P 500 companies rose to 3% from 2.8% Tuesday, according to Refinitiv data, still well below expectations for an 11.1% increase at the beginning of July.

Tesla Corporation (TSLA.O) It advanced 0.84% ​​before its earnings after the bell, focusing on any weakness in demand starting to weigh on the auto industry. Shares tumbled 3.94% after the close as the electric car maker missed revenue estimates for the third quarter.

Volume on US stock exchanges was 11.05 billion shares compared to an average of 11.62 billion for the full session over the last 20 trading days.

Low issues outnumbered advanced issues on the New York Stock Exchange by 3.28 to 1; On the Nasdaq, the ratio was 2.69 to 1 in favor of declining stocks.

S&P 500 hit 52-week high and 9 new low; The Nasdaq recorded 42 new highs and 232 new lows.

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(Reporting by Chuck Mikolajchak in New York; Editing by Matthew Lewis

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