S&P 500 Slips as Yield Spike Puts Tech in Crosshairs After Bank Earnings
2022.04.14 21:41
By Yasin Ebrahim
Investing.com — The S&P 500 slumped Thursday as a wave of mostly better-than-expected quarterly results from major Wall Street banks failed to lift investor sentiment as tech stocks resumed their trend lower.
The S&P 500 fell 0.53%, the Dow Jones Industrial Average was up 0.2%, or 101 points lower, the Nasdaq slipped 1.4%.
Major Wall Street banks including Goldman Sachs (NYSE:GS), Morgan Stanley (NYSE:MS), Citigroup Inc (NYSE:C) reported first-quarter results that beat analysts’ expectations. But Wells Fargo (NYSE:WFC) fell more than 5% after reporting a decline in quarterly report.
The fall in bank stocks comes in the wake of rising Treasury yields, which tend to boost the margins on lending for banks, as investors bet the Federal Reserve will lean aggressive on monetary policy tightening to curb inflation pressures.
The pace of the surge in yields has placed growth sectors of the market in the crosshairs, with big tech leading the decline.
Apple (NASDAQ:AAPL) fell 2%, while Alphabet (NASDAQ:GOOGL) Amazon.com (NASDAQ:AMZN), Microsoft (NASDAQ:MSFT) and Meta Platforms (NASDAQ:FB) were down more than 1%.
Twitter (NYSE:TWTR), however, sidestepped the selling in tech, but was well off its session highs as many doubt that Tesla (NASDAQ:TSLA) chief executive Elon Musk’s $54.20 a share offer to take the social media company private will succeed.
“In our view, the deal does not get done at this level, and Twitter’s Board will not view this offer, or Mr. Musk leading a change in the company as in the best interest of the company or shareholders,” Wedbush said in a note..
UnitedHealth Group (NYSE:UNH) Group, a major Dow component, was up 0.5% after cutting intraday losses following better-than-expected quarterly results and an increase in full-year guidance.
Energy, up about 1%, attempted to cushion the broader decline, underpinned by rising oil prices on fears about tightening global supplies as Russia and Ukraine look set to engage in a massive land battle in Eastern Ukraine.
On the economic front, investors digested a weaker picture as data showed initial jobless claims rose more than expected, while the latest retail sales report flagged the impact of red-hot inflation on the consumer.
Still economists remain sanguine on the strength of the consumer, citing excess savings built up during the pandemic.
“[W]e remain quite constructive on the outlook, because of the combination of excess savings and robust wage growth, particularly in the bottom half of the income distribution” {{Jefferies said in a note.}}
In other news, Peloton Interactive (NASDAQ:PTON) fell more than 4% after the fitness equipment maker cut the prices of its Bike, Bike+ and Tread machines, but raised the monthly fee for its on-demand fitness content as it looks to regain user growth.
