U.S. stocks extended declines Wednesday, with tech stocks heading for their biggest decline of the year, as Treasury yields marched higher and the dollar building gains against its global peers while investors reacted to the first wave of mega-cap tech earnings and continued to track movements in the bond market.
Microsoft (MSFT) -) and Google parent Alphabet (GOOGL) -) kicked-off this week's run of earnings from the so-called 'magnificent seven' late Tuesday with a mixed set of September quarter results, reflecting both the power for AI technologies to boost near-term profits and the impact of surging interest rates on corporate spending.
Microsoft's revenue growth in cloud computing, driven in part by its early investments in AI, lifted shares in the tech giant firmly higher in pre-market trading as it looks to add around 85 points to the Dow Jones Industrial Average at the opening bell.
Google, meanwhile, slumped 9.25% following a mixed set of third quarter earnings that showed slowing cloud computing growth overshadowing record ad revenues of $59.65 billion.
Facebook and Instagram owner Meta Platforms (META) -) posts its third quarter earnings after the bell later today, with magnificent seven stalwart Amazon (AMZN) -) following on Thursday.
In the bond market, a muted auction of $51 billion in 2-year notes yesterday, which drew softer demand from both foreign and domestic investors, drew a line under the recent Treasury market rally, which was also tested by a faster-than-expected reading for business activity by S&P Global over the month of October.
Benchmark 10-year notes yields were last marked 19 basis points higher in New York trading at 4.944% while 2-year notes were pegged at 5.125%, 7 basis points higher than yesterday's auction levels, following another weak auction of $52 billion in 5-year notes earlier in the session.
The U.S. dollar index, meanwhile, was marked 0.23% higher against a basket of six global currency peers and trading at 106.51 heading into the afternoon session.
In other markets, global oil prices drifted modestly higher in early New York trading, and extended those gains following Energy Department data on domestic stockpiles and international exports later this morning.
Brent crude contracts for December delivery were marked $2.05 cents higher at the close of Wednesday trading to settle at $90.11 per barrel while WTI contracts for the same month rose $1.65 to settle at $85.39 per barrel.
On Wall Street, the S&P 500 was marked 58 points lower, or 1.36%, into the final half hour of trading while the Dow was down 70 points despite the positive impact impact of Microsoft's advance.
The tech-focused Nasdaq, meanwhile, was down 305 points, or 2.32%, as the slump in Google shares and the surge in Treasury yields offset a smaller gain for Microsoft.
In overseas markets, Europe's Stoxx 600 was marked 0.21% higher in late-day Frankfurt trading amid another busy earnings session while Britain's FTSE 100 edged 0.3% higher in London.
Overnight in Asia, reports of a new trillion-yuan bond sale from the Chinese government, worth around $137 billion in U.S. dollar terms and aimed at adding further stimulus to the moribund economy, boosted sentiment and helped regional stocks eek out a modest 0.09% gain heading into the close of trading.
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