Nasdaq outperforms as investors applaud Microsoft, Dow transportation sinks

  • Microsoft rises as quarterly results beat estimates
  • Activision Blizzard down as UK blocks Microsoft deal
  • The First Republic ends down almost 30% on capital worries
  • Indices: Dow Jones slips 0.xx%, S&P falls 0.xx%, Nasdaq climbs 0.47%

April 26 (Reuters) – The tech-heavy Nasdaq closed slightly higher on Wednesday after strong results from Microsoft Corp (MSFT.O) boosted tech stocks, but the S&P 500 and Dow Jones fell on continued concerns about the weakening US economy and banking sector. .

Economically sensitive transportation stocks had their weakest day in 11 months, and banking stocks fell as regional bank First Republic hit a record high. Investors have been concerned about the banking sector since the recent failure of two US banks.

Microsoft shares rebounded 7.2% after upbeat quarterly results and sales, including robust artificial intelligence products. Its results have boosted shares of companies such as cloud computing competitor Inc. , up 2.3%; data analytics firm Datadog (DDOG.O), up 10.5%; and data cloud giant Snowflake Inc (SNOW.N), which closed up 8.5%.

Alphabet Inc (GOOGL.O) reported better-than-expected first-quarter results and a $70 billion share buyback plan, but its shares closed 0.1% lower.

“The market is looking to see where the economy and companies are going. We’ve had some good earnings reports, but investors are realizing that’s not enough to clarify the way forward,” said Lisa Erickson , responsible for public procurement in the United States. Bank Wealth Management in Minneapolis.

Investors are expecting more earnings reports and a key inflation reading on Friday as well as the Federal Reserve meeting next week, Erickson said.

The Dow Jones Industrial Average (.DJI) fell 228.96 points, or 0.68%, to 33,301.87; and the S&P 500 (.SPX) lost 15.64 points, or 0.38%, to 4,055.99. The Nasdaq Composite Index (.IXIC) closed up 0.47%, or 55.19 points, at 11,854.35, according to

The S&P 500 Technology Index (.SPLRCT) was the lone gainer among the benchmark’s 11 major industry sectors, adding 1.7%. At its peak for the day, it rose 2.8%.

But the Dow Transportation (.DJT) average fell 3.6%, leading to its biggest two-day drop since May 2022. The index was hurt by jitters in the economy after the goods data d Wednesday’s weaker-than-expected equipment and Tuesday’s United Parcel Service (UPS) weakness. .N) results.

New orders for key U.S.-made capital goods fell more than expected in March and shipments fell, suggesting business capital spending likely remained a drag on first-quarter economic growth .

Traders work on the floor of the New York Stock Exchange (NYSE) in New York, U.S., April 14, 2023. REUTERS/Brendan McDermid/File Photo

Still, earnings forecasts looked much more optimistic after Tuesday night’s bullish reports, with analysts now expecting a 3.2% contraction in first-quarter earnings for S&P 500 companies, from a decline of 3.0%. 9% just a day ago.

Of the 163 S&P 500 companies that reported first quarter earnings through Wednesday morning, 79.8% beat analysts’ expectations, according to Refinitiv IBES data. In a typical quarter, 66% of companies exceeded estimates.

However, shares of regional lender First Republic Bank (FRC.N) fell 29.8%, hitting a new high for the second day in a row. This helped push the S&P 500 Banking Index (.SPXBK) down 1.4% on the day.

Investors worried about a morning report that the US government was unwilling to stage its bailout, after the lender announced falling deposits earlier this week.

Additionally, U.S. banking regulators were considering the possibility of downgrading their private ratings of the First Republic, which could curb its borrowing from the Fed, Bloomberg News reported. The bank’s shares have fallen 96.1% so far this year.

However, shares of PacWest Bancorp (PACW.O), another regional bank, rose 7.5%, beating first-quarter earnings estimates and stabilizing deposit outflows.

Facebook’s parent company Meta Platforms Inc (META.O) rose about 10% after its second-quarter revenue forecast bell beat analysts’ expectations as the digital advertising market moved to proven platforms such as Facebook and Instagram.

Activision Blizzard (ATVI.O) fell 11.4% after the UK competition regulator blocked its takeover by Microsoft due to antitrust concerns.

Falling issues outnumbered advances on the NYSE by a ratio of 2.07 to 1. The S&P 500 posted five new 52-week highs and 11 new lows.

On the American stock exchanges, 11.06 billion shares changed hands against 10.4 billion on average for the last 20 sessions.

Reporting by Sruthi Shankar in Bengaluru Editing by Vinay DwivediS

Our standards: The Thomson Reuters Trust Principles.

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