© Reuters. FILE PHOTO: Traders work on the floor at the New York Stock Exchange (NYSE) in New York City, U.S., October 23, 2023. REUTERS/Brendan McDermid/File Photo
By Stephen Culp
NEW YORK (Reuters) – U.S. stocks tumbled in a broad sell-off on Wednesday as Alphabet (NASDAQ:) shares slid after the Google parent posted disappointing earnings and as U.S. Treasury yields rose, reviving fears that interest rates could stay higher for longer.
The benchmark notched its fifth daily decline in six to close below the closely watched 4,200 level. The slumped to its biggest single-session percentage drop since Feb. 21, with interest rate sensitive megacaps weighing heavily the tech-laden index.
The finished modestly lower.
The plummeted 4.1%, its biggest one-day plunge since Dec. 22, 2022.
The Communication Services sector posted its largest percentage decline since Feb. 3.
Shares of Alphabet Inc plunged after the company reported disappointing cloud services revenue, reviving fears of an economic slowdown.
Benchmark Treasury yields resumed their upward drift, edging closer to the 5% level, feeding fears high interest rates could linger.
“Earnings have been a mixed bag, and that’s causing some headaches but the real issue remains (Treasury) yields, which are showing no signs of weakening,” said Ryan Detrick, chief market strategist at Carson Group in Omaha.
Yields on rose after robust new home sales data and mortgage rates reaching 23-year highs stoked fears of prolonged elevated rates.
“The economy in the U.S. continues to show it’s on strong footing,” Detrick added. “That is likely one of the main reasons yields have been as strong as they’ve been.
“The bond market is sniffing out a potentially better economy down the road,” Detrick said.
The Dow fell 105.45 points, or 0.32%, to 33,035.93, the S&P 500 lost 60.91 points, or 1.43%, to 4,186.77 and the Nasdaq Composite dropped 318.65 points, or 2.43%, to 12,821.22.
Among the 11 major sectors in the S&P 500, communications services had the largest percentage loss, while consumer staples and utilities ended modestly green.
It is a momentous week for earnings, with nearly one-third of the companies in the S&P 500 expected to post third-quarter results.
So far, 146 of the S&P 500 have reported. Of those, 80% have delivered earnings above expectations.
Analysts now see S&P 500 year-on-year earnings growth of 2.6% for the July-September period, up from 1.6% at the beginning of the month.
Microsoft (NASDAQ:) advanced 3.1% following its better than expected quarterly report, issued after the market closed on Tuesday.
The economically sensitive Dow Jones Transport Average index touched its lowest in more than four months after trucking firm Old Dominion Freight (NASDAQ:) Line posted earnings.
The trucking firm’s shares fell 3.9%.
Defense contractor General Dynamics (NYSE:) rose 4.0% after reporting a jump in third-quarter revenue.
After the closing bell, IBM (NYSE:) and Meta Platforms (NASDAQ:) posted earnings that were stronger than expected, and their shares climbed in extended trading.
Declining issues outnumbered advancing ones on the NYSE by a 3.61-to-1 ratio; on Nasdaq, a 2.63-to-1 ratio favored decliners.
The S&P 500 posted no new 52-week highs and 63 new lows; the Nasdaq Composite recorded 16 new highs and 500 new lows.
Volume on U.S. exchanges was 10.71 billion shares, compared with the 10.68 billion average for the full session over the last 20 trading days.
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