U.S. stocks closed mixed on Wednesday, as investors hoped that stronger-than-expected tech earnings could boost sentiment amid the collective concerns over Fed rate hikes, China's Covid-19 lockdown and Russia's war on Ukraine.
Microsoft (MSFT) shares provided an early thrust for tech stocks following its better-than-expected third quarter earning last night, with the heavyweight cloud and computing group helping the Nasdaq recover from a 514 point plunge that dragged the index to its lowest levels since December 2020.
A much wider-than-expected loss for Dow component Boeing (BA), however, added to some of the market's broader concerns over the strength of the first-quarter earnings season.
Bullish tech sentiment also need to fight against a worrying escalation of tensions between Russia and its European neighbors after the state-controlled energy giant Gazprom cut off natural gas supplies to Poland and Bulgaria for failing to meet an earlier demand to pay in rubles.
The move, widely seen as a warning to Germany and other Western European states that have challenged Russia's February invasion of Ukraine, helped push the euro to a five-month low of 1.0597 against the U.S. dollar and kept gains for regional stocks muted in early Frankfurt trading.
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The U.S. dollar index, meanwhile, continues to print multi-year highs against its global peers -- amid its best April gain in more than five years -- and was marked another 0.7% in early New York trading to 103.01 as traders price-in the impact of 50 basis point rate hikes at both of the Federal Reserve's next two policy meetings and move into safe-haven assets.
That, in part, has lifted the market's key volatility index, the VIX, well past the 30-point mark, a level traders typically associate with large intra-day moves for major U.S. indices.
"Investors are simply unwilling to pay premium prices for stocks with the near certainty that the Federal Reserve will raise interest rates many more times this year," Ryan Belanger, managing principal and founder at Claro Advisors, a wealth management firm based in Boston with $700 million in assets under management.
"Since the Covid lows of March 2020, we have yet to see any meaningful stock market pullback until now," he added. "It's understandable to see choppy markets after nearly two consecutive years of strong gains."
That, as well as another busy slate of corporate earnings will likely capture attention on Wall Street again Wednesday, with Boeing BA, T-Mobile US (TMUS) and Kraft Heinz (KHC) reporting before the bell and Meta Platforms (FB), Ford (F), PayPal (PYPL) and Qualcomm (QCOM) expected after the close of trading.
The Dow Jones Industrial Average closed 61.75 points higher while the S&P 500, which is down 12.4% for the year, added 8.76 points. The tech-focused Nasdaq slipped 1.81 points.
Alphabet (GOOGL) shares slumped 3.67% lower after the search and ad sales giant posted softer-than-expected first-quarter revenues amid a global pullback in ad sales linked in part to Russia's war on Ukraine and increasing competition from China-based TikTok.
Boeing fell 7.53% after it posted another wider-than-expected first quarter loss thanks in part to around $1.5 billion in 'abnormal cost' charges linked to its 777x twin-engine jet.
Microsoft gained 4.81% after the tech giant forecast stronger-than-expected revenue growth for its key divisions, offsetting concerns over the pace of gains in its Azure cloud offering.
T-Mobile US (TMUS) jumped 3.91% following much stronger-than-expected first-quarter earnings as well as a boost in its forecast for net additions over the full year, as it continues to attract new customers with its expanding 5G network.
Visa (V), another Dow component, shares surged 6.44% after the credit card issuer posted much stronger-than-expected first-quarter earnings amid a consumer spending rebound powered in part by business and personal travel following a 'short-lived" jump in Omicron infections.
