- Netflix falls after pessimistic forecast
- Tesla after recent US price cuts
- Morgan Stanley slips as Q1 earnings slide
- Indices down: Dow 0.41%, S&P 0.46%, Nasdaq 0.64%
April 19 (Reuters) – Wall Street’s main indices fell on Wednesday as Treasury yields rose on growing expectations that the Federal Reserve may keep interest rates higher for longer, while mixed gains from regional banks and weakness in Tesla continued to weigh on sentiment impaired.
Tesla Inc (TSLA.O) fell 2.4% after the electric vehicle maker cut prices for the sixth time this year in the United States before reporting its first-quarter results.
Netflix Inc (NFLX.O) slipped 4.7% after the video streaming pioneer issued a bearish forecast.
Morgan Stanley (MS.N) slipped 1.8% as the Wall Street bank reported a fall in quarterly earnings, a day after rival Goldman Sachs Group Inc (GS.N) reported a 19% drop in earnings on dealmaking and suffered losses from the sale of some assets in its consumer business.
While the start of the earnings season for equities has been broadly supportive, investors will be watching updates from market heavyweights and consumer companies closely for signs of inflation and an economic slowdown weighing on margins.
Mixed economic data has recently fueled bets that the US Federal Reserve will hike interest rates by 25 basis points in May, with traders seeing an 83% chance of such a move, according to CME Group’s Fedwatch tool.
The two-year Treasury yield, which most closely reflects near-term interest rate expectations, hit a one-month high and the 10-year yield hit a four-week high as traders scaled back expectations of rate cuts later this year.
“I don’t know if they (Fed policymakers) are going to hike much more, but the hawkish tone says don’t expect any rate cuts this year, another thing that’s pushing yields a little bit higher because a lot of them.” expected a cut,” said Kim Forrest, chief investment officer at Bokeh Capital Partners in Pittsburgh.
“Also, UK inflation came in very hot and there are fears it could spread here.”
Communication Services (.SPLRCL), Materials (.SPLRCM) and Technology (.SPLRCT) were among the biggest detractors in the S&P 500 sector.
The Fed’s Beige Book, a snapshot of the health of the US economy, will be released at 2pm ET (1800 GMT) and investors will examine it for the impact of the recent banking crisis on economic activity.
As of 9:44 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 140.38 points, or 0.41%, to 33,836.25, the S&P 500 (.SPX) was down 19.18 points, or 0.46% 4,135.69 and the Nasdaq Composite (.IXIC) fell 77.37 points, or 0.64%, to 12,076.04.
Chipmakers like Micron Technology (MU.O) and Qualcomm Inc (QCOM.O) each slipped around 1% after European giant ASML Holding NV (ASML.AS) noticed some signs of customer caution.
The Philadelphia SE Semiconductor Index (.SOX) fell 1.3%.
Regional banks’ earnings were mixed, with Citizens Financial Group Inc (CFG.N) slipping 3.4% after first-quarter results missed estimates.
Western Alliance Bancorp (WAL.N) rose 17.3% after the regional bank published stronger-than-expected earnings and said its deposits had stabilized following the banking crisis in March.
Shares in First Republic Bank (FRC.N), Zions Bancorporation (ZION.O) and Pacwest Bancorp (PACW.O) rose between 3% and 8.1%.
Declining issues outperformed the climbers with a 3.70-to-1 ratio on the NYSE and a 2.40-to-1 ratio on the Nasdaq.
The S&P index posted 10 new 52-week highs and one new low, while the Nasdaq posted 17 new highs and 57 new lows.
Reporting by Sruthi Shankar in Bengaluru Editing by Vinay Dwivedi
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