S&P 500 settles higher, supported by Microsoft

THE S&P 500 ended higher on Wednesday following a steep drop the day before, with strong revenue forecasts from Microsoft and Visa helping to alleviate worries about slowing global economic growth and rising interest rates.

Microsoft Corp. rallied after the software heavyweight late on Tuesday gave a strong revenue forecast, while payments network Visa, Inc. jumped after it predicted revenue above prepandemic levels.

Tuesday’s gains in the S&P 500 and Dow Jones Industrial Average followed a steep sell-off the day before that saw the Nasdaq drop to its lowest close since December 2020 as investors worried that the US Federal Reserve might raise interest rates more than expected in its fight against inflation.

The S&P 500 communication services index fell 2.6%, with Google-parent Alphabet dropping 3.7% after it reported that quarterly YouTube ad sales slowed and its revenue missed expectations.

“What we’ve really been seeing is that misses are being punished a little more severely, but that beats are also being rewarded,” said Rob Haworth, a senior investment strategist at US Bank Wealth Management in Seattle. “With interest rates where they are and the 10-year Treasury testing 2.8%, I think there is a big question about growth and valuations.”

In extended trade, Facebookowner Meta Platforms, Inc. rose 9% following its quarterly report. During the trading session, it had declined 3.3%. Planemaker Boeing Co. tumbled 7.5% after it said it was halting production of 777X jets through 2023 due to certification problems, as well as weak demand for the wide-body jet.

Nearly a third of the companies on the S&P 500 have reported results this week. Overall, earnings have been better than expected, with nearly 80% of the 176 companies in the S&P 500 that have reported so far beating Wall Street expectations. Typically, only 66% of companies beat estimates.

The Dow Jones Industrial Average rose 0.19% to end at 33,301.93 points, while the S&P 500 gained 0.21% to 4,183.92.

The Nasdaq Composite dropped 0.01% to 12,488.93.

Tesla, Inc. recovered 0.6% following a 12% slump on Tuesday related to concerns that Chief Executive Elon Musk may have to sell shares to fund his $44-billion buyout of Twitter, Inc.

Toymaker Mattel, Inc. surged almost 11% after a source told Reuters it was exploring a sale.

Audio streaming platform Spotify Technology SA’s US-listed shares tumbled more than 12% following a downbeat current-quarter revenue forecast.

Volume on US exchanges was 12.1 billion shares, compared with a 11.7 billion average over the last 20 trading days.

Declining issues outnumbered advancing ones on the NYSE by a 1.26-to-1 ratio; on Nasdaq, a 1.44-to-1 ratio favored decliners.

The S&P 500 posted 3 new 52-week high and 64 new lows; the Nasdaq Composite recorded 25 new highs and 724 new lows.