U.S. stocks were mixed by the close of trading Wednesday, while the dollar extended its recent decline and Treasury bond yields slumped, as investors worried that a string of grim earnings and forecasts from major American companies sparked renewed concern for the fate of the world's biggest economy.
Weaker-than-expected earnings from Google parent Alphabet (GOOGL), a softer outlook from Microsoft (MSFT) and a downbeat forecast on chip demand from Texas Instruments (TXN) rounded out a trio of tech updates that point to renewed weakness in the global economy after the close of trading last night.
Further updates from toymaker Mattel (MAT), which cut its near-term outlook, only added to the gloom, offsetting a relatively optimistic forecast for consumer spending from Visa (V).
Wall Street's reaction Wednesday, however, may be more linked to action in the bond markets, as weakening growth prospects drive investors into the safety of U.S. Treasury bonds, pulling yield firmly lower in overnight trading.
Benchmark 10-year notes were marked another 6 basis points lower at 4.017% -- and are down more than 34 basis points since late last week -- while 2-year notes eased to 4.442% following a smaller-than-expected rate hike of 50 basis points by the Bank of Canada, which lifted its key policy rate to 3.75%. while noting that "future rate increases will be influenced by our assessments of how tighter monetary policy is working to slow demand."
The U.S. dollar index, which tracks the greenback against a basket of six global currencies, fell another 1.13% in New York trading to a three-week low of 109.23, offsetting the likely impact of big declines for Microsoft and Google, which are likely to lop nearly $300 billion from the market value of the biggest U.S. tech companies at the start of trading.
The yield and dollar pullbacks are also paring bets on another jumbo Fed rate hike in December, and while the odds of a 75 basis point move next week are locked-in at 89.3%, the chances of a follow-on move in December have fallen to 38.6%, according to the CME Group's FedWatch, as investors grow more concerned for the broader economy's near-term prospects.
On Wall Street, the S&P 500, which is up 7.6% for the month closed 28.4 points lower while the Dow Jones Industrial Average -- which has a less significant weight in terms of tech components -- ended up by just 3.3 points. The tech-focused Nasdaq fell 228 points, or 2.04%, on the back of Google and Microsoft slumps.
Microsoft was marked 7.72% lower after the tech giant posted weakening growth rates in its key cloud computing division and forecast disappointing revenue gains over the final months of the year.
Alphabet fell 9.14% after the Google parent company posted weaker-than-expected third quarter earnings thanks to slowing ad sales growth that echoed the warning last week from messaging ap maker Snap (SNAP).
Visa (V) shares gained 4.57% after the credit card group posted better-than-expected third quarter earnings.
Intel (INTC) shares were active, falling 0.73% after the chipmaker said the listing of its self-driving division, Mobileye Global (MBLY) , generated better-than-expected investor interest and a higher end price.
Bristol Myers Squibb (BMY) shares gained 2.31% after it posted better than-expected third quarter earnings as solid gains for its blood clot treatment offset ongoing weakness for its off-patent cancer drug Revlimid.
In overseas markets, the region-wide Stoxx 600 was up 0.08% in afternoon Frankfurt trading, while the firmer pound held down gains for the FTSE 100, which was marked 0.04% higher in London.
Overnight in Asia, stocks rebounded from their lowest levels in more than two years, following on from last night's solid close on Wall Street, with the region-wide MSCI ex-Japan index marked 1.2% higher heading into the close of trading. Japan's Nikkei 225 gained 0.67%.
