Earnings lift Wall Street, tech weighs
WALL STREET ended mixed on Monday as concerns about soft smartphone demand weighed on tech stocks and pulled the Nasdaq lower while earnings optimism protected against deeper losses. Tech stocks dragged on both the S&P 500 and the Nasdaq ahead of a big week of earnings for the sector.
NEW YORK — Wall Street ended mixed on Monday as concerns about soft smartphone demand weighed on tech stocks and pulled the Nasdaq lower while earnings optimism protected against deeper losses.
Tech stocks dragged on both the S& P 500 and the Nasdaq ahead of a big week of earnings for the sector. Chipmaker shares dropped after the world’s largest contract chipmaker, Taiwan Semiconductor Manufacturing Co. Ltd., cut its full-year revenue target due to softer demand for smartphones.
Yields on 10-year US Treasuries rose to their highest level since January 2014 amid concerns over growing supply of government debt and accelerating inflation.
“The markets are clearly spooked by this move in the bond market,” said Stephen Massocca, senior vice-president at Wedbush Securities in San Francisco. “Ultimately if these long-term interest rates continue to move higher, that’s going to continue to be a stumbling block for markets and I think we’ll continue to see markets trading down.”
Earnings provided a bright spot, with 18% of the companies in the S&P 500 having reported, 78.2% of which have beat consensus estimates.
“By and large earnings have been very good, they continue to be supportive of the market,” Massocca added.
Analysts expect earnings growth at S&P 500 companies of nearly 20% in the first quarter, the strongest showing in seven years, according to Thomson Reuters data.
Google parent Alphabet, Inc. was up slightly in volatile after-hours trading following its earnings release; the company reported a 73% jump in profits in the first quarter.
Quarterly results are expected this week from 181 S& P 500 companies, including technology heavy-hitters Facebook, Inc., Microsoft Corp., Amazon.com, Inc. and Intel Corp.
The Dow Jones Industrial Average fell 14.25 points or 0.06% to 24,448.69; the S&P 500 gained 0.15 points or 0.01% to 2,670.29; and Nasdaq Composite dropped 17.53 points or 0.25% to 7,128.60.
Of the 11 major S&P sectors, six ended the session in positive territory, with the biggest percentage gain coming from the Telecom index. The Philadelphia Semiconductor index closed down 1.3%, posting its fourth straight session of declines on concerns of slowing smartphone demand.
Merck & Co., Inc. helped lift the health care sector 2.4% following a Goldman Sachs upgrade to “buy.”
Aluminum company stocks dropped as the United States opened the door to sanctions relief for Russian aluminum giant United Company Rusal Plc. Alcoa tumbled 13.5% and Arconic fell 5.2%, making it the biggest percentage loser on the S&P.
Declining issues outnumbered advancing ones on the NYSE by 1.22 to 1; on Nasdaq, a 1.39-to-1 ratio favored decliners. Volume on US exchanges was 5.76 billion shares, compared to the 6.80 billion average over the last 20 trading days. —