Stocks Fall As Tech Stocks Slid After Earnings
4:09 pm Wednesday, October 26th, 2022
US stocks dropped as investors parsed fresh economic data and disappointing earnings while mulling the Federal Reserve’s path after the Bank of Canada announced a smaller-than-expected rate hike.
Factors supporting the stock market today include falling Treasury yields, favorable quarterly results from names like Harley-Davidson (HOG) and Bristol-Meyers (BMY), and a growing belief that the Fed will soften its approach after the November meeting.
Resilience to early selling efforts has acted as its own supporting catalyst for the market, spurring some short covering activity and possibly some fear of missing out on further gains.
The 10-yr note yield is flirting with the 4.00% level. It is currently down eight basis points to 4.02%. The move there has been catalyzed by slowdown concerns wrapped up in the acknowledgment from Alphabet and Microsoft that they have seen a slowdown in advertising spending, a 10.9% month-over-month decline in new home sales in September, and the Bank of Canada raising its key policy rate by 50 basis points to 3.75% instead of the 75 basis points that market participants had been expecting.
Meanwhile, the communication services sector (-3.3%) is the biggest laggard by a wide margin thanks to Alphabet and Meta Platforms (META), which reports after today’s close. Information technology (-1.1%) is another top laggard also thanks to its mega cap components, but its losses are limited by big earnings-driven gains in Enphase Energy (ENPH) and Dow component Visa (V).
