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U.S. stocks on Wednesday ended lower, with the benchmark S&P 500 (SP500) posting a four-day losing streak for the first time since the start of the year. Chip stocks led the technology sector lower after a weak earnings report from Dutch semiconductor equipment ASML (ASML).
Meanwhile, some stability returned to the bond market following a sell-off driven by a dent to interest rate cut expectations.
The tech-heavy NASDAQ Composite Index (COMP:IND) fell 1.15% to close at 15,683.37 points, while the S&P (SP500) slipped 0.58% to settle at 5,022.21 points. The blue-chip Dow (DJI) retreated 0.12% to conclude at 37,753.31 points.
Of the 11 S&P sectors, seven ended in the red. Technology shed nearly 2%.
Wall Street ended mixed in the previous session after Federal Reserve chair Jerome Powell at a moderated conference said that recent data showed a lack of progress on inflation. Markets have now pushed out their expectations of the first 25 basis point rate cut by the Fed to September.
"On the economic side of things, there's also concern about the future of interest rate cuts. Bank of America (BAC) came out and said that there is a real risk of not seeing any interest rate cuts until March of 2025 or later. This is because of hotter than expected inflation data that has been rather sticky. At the start of this year, analysts were expecting three rate cuts. But the (Fed) has become more hawkish as time has gone on," Daniel Jones, investing group leader of Crude Value Insights, told Seeking Alpha.
Treasury yields were lower on Wednesday, as a three-day bond sell-off finally eased up. The longer-end 30-year yield (US30Y) was down 7 basis points to 4.70%, while the 10-year yield (US10Y) was down 8 basis points to 4.59%. The shorter-end more rate-sensitive 2-year yield (US2Y) was down 6 basis points to 4.94%.
See how Treasury yields have done across the curve at the Seeking Alpha bond page.
On Wednesday, quarterly earnings took the spotlight with a few major names on tap. ASML (ASML) reported a nearly 61% slide in bookings on a Q/Q basis, sending its U.S.-listed shares down more than 7%. Chip heavyweights such as Micron Technology (MU), Nvidia (NVDA) and Broadcom (AVGO) were among the top percentage losers on the NASDAQ Composite (COMP:IND).
United Airlines (UAL) provided a lift to the S&P 500 (SP500), surging more than 16% and topping the list of percentage gainers. The U.S. airline provided better-than-feared results for a quarter that saw a significant headwind in the form of the grounding of its Boeing (BA) 737 Max fleet. Other carriers such as American Airlines (AAL) and travel-related stocks such as Norwegian Cruise Line (NCLH) received a lift.
Conversely, Travelers (TRV) slid ~8% and was a top percentage loser on both the S&P 500 (SP500) and the Dow (DJI). The insurer posted a quarterly top and bottom line miss largely due to elevated catastrophe losses caused by wind and hail storms.
Trucking and freight logistics stocks slipped after J.B. Hunt Transport Services (JBHT) and Knight-Swift Transportation (KNX) provided soft reads on demand and pricing with their respective earnings and guidance updates.
"High growth technology companies tend to perform more poorly during difficult economic times and when interest rates are higher. So it only makes sense that the NASDAQ would see the greatest pain (today). In addition to this though, ASML (ASML) reported results that showed a 61% plunge in quarterly bookings. That brought other semiconductor firms down such as Nvidia (NVDA)," Crude Value Insights' Jones said.
Turning to the economic calendar, MBA mortgage applications rose in the past week. Additionally, The Atlanta Fed's business inflation expectations inched lower in April.
The Fed's Beige Book report on regional activity also arrived in the afternoon, showing a slight expansion.
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