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Dow slips from report as earnings rally subsides, falling for the primary time in Four days

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The blue-chip Dow Jones Industrial Average fell from a record high on Wednesday as the momentum of a strong earnings season wore off.

The 30-stock average fell 89 points, falling for the first time in four days. The S&P 500 traded near the flatline while the tech-heavy Nasdaq Composite traded 0.8% higher amid a surge in Microsoft and Alphabet stocks.

Microsoft stock rose 4% after the tech company reported earnings that exceeded analyst estimates and posted the fastest revenue growth since 2018. The Google parent Alphabet also rose by more than 4% after a stronger than expected quarterly report.

General Motors shares fell more than 3% even after the industrial giant beat Wall Street’s earnings and sales estimates for the third quarter. Boeing saw its stock fall 1.4% after the aircraft maker posted an unexpectedly large loss.

Robinhood stocks were beaten, falling 11% the day after the trading app reported sales well below expectations, largely due to the weakness of crypto trading. Twitter stocks also fell 9%, despite strong gains, on concerns about the spending forecast.

So far, around 38% of the S&P 500 has reported gains. Of the names that posted quarterly updates, 83% exceeded earnings expectations while 79% exceeded sales estimates.

“This winning season has been about price momentum and whether consumers will be able to cope with rising costs,” said Ed Moya, senior market analyst at Oanda. “So far it seems that the consumer can handle it,” he added.

Strong results were key to pushing key averages to new highs. The S&P 500 gained more than 6% in October and is on the way to its best monthly performance since November 2020. The equity benchmark reached its 57th record close in 2021 on Tuesday.

Texas Instruments shares plunged 4% after the company missed sales estimates, while Visa fell 2.5% despite beating sales and bottom line results. Enphase Energy rose 20% after reporting record sales amid headwinds in the supply chain.

Coca-Cola rose 2.6% after the company hit its sales and earnings numbers and raised its outlook.

“We are seeing signs that there may be more gains in the last two months of the year,” said Ryan Detrick, chief market strategist at LPL Financial. “Seasonal tailwinds, improving internals, and clear signs of a peak in the Delta line all offer potential energy for stocks at year-end, so we stick to our overweight recommendation.”

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