UNITED STATES: The US Wall Street indices dipped on Wednesday due to rising Treasury yields, mixed regional bank profits, and weakness in Tesla. Tesla Inc saw a 1.6% decline after its sixth price cut this year in the US. This was due to speculation that the Federal Reserve could maintain its policy of raising rates for an extended period of time.
Netflix Inc saw a 3.8% decline in profit, while Goldman Sachs Group Inc reported a 19% decline in profit, and Morgan Stanley reported a decline in quarterly earnings and a 0.5% decline in its stock price.
Despite the fact that the start of earnings season has been mostly positive for stocks, investors will closely monitor reports from household name companies as well as market leaders for indications that inflation and the slowing economy are impacting margins.
A senior investment strategist at Allspring Global Investments believes that an earlier recession than expected could be a major surprise. He predicts that margins will experience increased pressure, which could increase market downside risks.
Bets that the US central bank will raise interest rates by 25 basis points in May have increased due to conflicting economic data. According to CME Group’s Fedwatch tool, there is an 83% chance that this will happen.
The yield on 10-year Treasury notes and two-year bonds has reached four-week highs due to higher-than-anticipated inflation in Britain and the growing likelihood that the Fed will continue raising rates.
The Dow Jones Industrial Average was down 98.33 points, or 0.29%, to 33,878.30 at 11:43 a.m. ET. The S&P 500 was down 7.73 points, or 0.19%, to 4,147.14, and the Nasdaq Composite was down 23.20 points, or 0.19%, to 12,130.21.
Defensive stocks increased, such as healthcare and utilities, which often do well in uncertain economic times. Investors will closely examine the “Beige Book” to see how the recent banking crisis has affected economic activity.
ASML Holding NV’s customer caution led to chipmakers’ declines, while the SE Semiconductor index fell 1.4%. Regional banks’ earnings were mixed, with Citizens Financial Group falling 2.3% and Western Alliance Bancorp increasing 15.6%.
Zions Bancorporation, Pacwest, and First Republic Bank all saw gains of between 3% and 7.3% on their respective stock exchanges, with declining issues outweighing advancing ones.