US markets finished mixed Wednesday, with declines in Microsoft and other big-name tech stocks overshadowing advances on the rest of Wall Street.
Despite the fact that the bulk of the firms in the S&P 500 climbed, the index declined 16.33 points, or 0.4%, to 4,267.52. The Dow Jones Industrial Average rose 91.74 points, or 0.3%, to 33,665.02, while the Nasdaq sank 171.52 points, or 1.3%, to 13,104.89.
Microsoft, Amazon, Nvidia, and Alphabet all fell at least 3% and were the S&P 500’s largest weights. Because they are some of the most valuable stocks on Wall Street, their fluctuations have a greater impact on the index.
It’s a reversal from much of this year, when a small handful of high-growth firms led the way on anticipation for Fed rate cuts and excitement about artificial intelligence. However, tech stocks are expected to be among the hardest hurt by higher interest rates, and Treasury yields were rising.
Yields rose after the Bank of Canada boosted policy interest rates on Wednesday, surprise some investors after keeping rates unchanged since January. The Fed will make its own rate decision next week.
Meanwhile, Campbell Soup fell 8.9% after reporting lower-than-expected revenue for the most recent quarter. It also provided earnings guidance that fell short of analysts’ estimates, as price rises cause some customers to buy less.
However, the rest of the market climbed as Wall Street’s gains spread out. The Russell 2000 index of smaller stocks rose 1.8%, continuing its hot streak after a stronger-than-expected data on hiring last week hinted that a recession may be further away than previously thought.
Dave & Buster’s soared 18.3% on Wall Street after posting higher-than-expected profit for the most recent quarter.
Brown-Forman surged 4% as the spirits company announced higher-than-expected profit in the most recent quarter, thanks in part to growth in its Woodford Reserve brand.
The market has been rising for months as a result of a strong economy that has defied fears of a recession. But the concern remains, and Wall Street is wondering which will happen first: a recession or dropping inflation enough for the Federal Reserve to cut interest rates?
That is why Wall Street is so focused on next week. The US government is set to give the most recent monthly data on consumer and wholesale inflation. Thursday will also see the announcement of the Federal Reserve’s latest interest rate hike.
The market consensus is that the Fed will keep interest rates unchanged next week. That would be the first time in more than a year that the Fed has not raised interest rates. However, traders continue to expect the Fed to raise interest rates in July.
This is critical since the purpose of high interest rates is to contain rising inflation by slowing the overall economy and lowering stock, bond, and other investment values. The Federal Reserve raised its key overnight interest rate to its highest level since 2007.
High interest rates have already generated fissures in the banking and manufacturing industries in the United States, though the labor market has remained impressively stable.
One anticipated boost to the global economy did not materialize, adding to the burden. Trade data from China suggested that the world’s second-largest economy was slowing even more.
China’s exports decreased 7.5% year on year in May, while imports declined 4.5%, adding to evidence of a stalling economic rebound following the easing of anti-COVID curbs in December, which hampered travel and business.
The dip in exports was the first year-on-year drop in three months, with export volumes slipping below their start-of-year levels. “And with the worst yet to come for many developed economies, we believe exports will fall further before bottoming out later this year,” Capital Economics’ Julian Evans-Pritchard wrote in a commentary.
Shanghai stocks jumped 0.1%, while Hong Kong’s Hang Seng rose 0.8%.
The Nikkei 225 index in Tokyo fell 1.8%, the most in 12 weeks. According to analysts, investors were selling to lock in recent profits after prices reached their greatest level since the early 1990s.
In the bond market, the 10-year Treasury yield increased to 3.78% from 3.68% late Tuesday. It aids in the determination of mortgage and other critical lending rates.
The two-year yield, which is more sensitive to Fed predictions, increased to 4.55% from 4.50%.
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