Major market averages opened Wednesday’s trading session in the red after Big Tech earnings kicked off with a stumble.
The tech-heavy Nasdaq Composite (COMP.IND) is lower by 2% and has fared the worst, with Alphabet and Microsoft both down post-earnings. Meta results arrive postmarket today.
At the same time the S&P 500 (SP500) is -0.8% and the Dow (DJI) is lower by 0.1%.
Rates continue to decline. The 10-year Treasury yields (US10Y) is down 6 basis points to 4.05%, near one-week lows. The 2-year yield (US2Y) is down 2 basis points to 4.45%.
“Clearly, the market is continuing to price a dovish Fed pivot at next week’s FOMC meeting, perhaps spurred on by yesterday’s US housing data, which showed the market continuing to cool off, presumably as rate hikes dent demand, feeding directly into some officials’ concerns about potentially overtightening,” Caxton’s Michael Brown said. “While the pace of tightening will slow, likely to 50bps from 75 at the December meeting, I think it’s wrong to interpret this as a dovish pivot, especially with rates likely to sit at or above 5% throughout 2023.”
More housing numbers arrive shortly, with September new home sales due. Economists expect a drop to an annual rate of 585K from 685K.
Home sales “have fallen sharply and, just as night follows day, home prices are now falling at the fastest M/M pace since March 2009,” MKM strategist Michael Darda wrote. “Owners’ equivalent rent (which makes up more than one-third of the core CPI) tends to lag home prices by one-to-two years, rendering it an inappropriate ‘target’ for policymakers, in our view.”
Among other stocks, Skechers is tumbling following weak profit and sales guidance.
After GOOG and MSFT weighed in, which Big Tech stock looks best for 2023? Vote in out poll.