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Netflix falls after downbeat forecast
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Tesla down on latest cuts to US prices
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Morgan Stanley slips as Q1 profit falls
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Indexes down: Dow 0.29%, S&P 0.19%, Nasdaq 0.19%
(Updates prices throughout; adds details, comments)
By Sruthi Shankar and Ankika Biswas
April 19 (Reuters) - Wall Street's main indexes edged
down on Wednesday as Treasury yields rose on growing
expectations that the Federal Reserve could keep interest rates
higher for longer, while mixed earnings from regional banks and
weakness in Tesla further dented sentiment.
Tesla Inc dropped 1.6% after the electric-vehicle
maker's sixth price cut this year in the United States, ahead of
its first-quarter results.
Netflix Inc slid 3.8% after the video-streaming
pioneer issued a downbeat forecast.
Morgan Stanley slipped 0.5% as the Wall Street bank
reported a fall in quarterly earnings, a day after rival Goldman
Sachs Group Inc posted a 19% drop in profit.
While the start of the earnings season has been largely
supportive for equities, investors will closely watch updates
from market heavyweights as well as consumer companies for signs
of inflation and economic slowdown hurting margins.
"The consensus coming out of corporate America is that we
have good times now, but harder times ahead. The big surprise
could be an earlier recession than expected," said Brian
Jacobsen, senior investment strategist at Allspring Global
Investments.
"What we are expecting is that margins are going to come
under further pressure, which could mean more downside risks for
markets."
Mixed economic data recently has fueled bets that the U.S.
central bank will hike interest rates by 25 basis points in May,
with traders seeing an 83% chance for such a move, as per CME
Group's Fedwatch tool.
The 10-year Treasury yield hit four-week highs, while interest rate sensitive two-year yields scaled a five-week peak, as global yields were dragged upwards by higher-than-expected British inflation and increasing possibility the Fed could keep hiking rates. Defensive stocks, including healthcare and utilities , that tend to do well during economic uncertainties rose, limiting broader market declines. The Fed's "Beige Book", a snapshot of the health of the U.S. economy, will be released at 2:00 p.m. ET (1800 GMT), and investors will scrutinize it for the impact of the recent banking crisis on economic activity. At 11:43 a.m. ET, the Dow Jones Industrial Average was down 98.33 points, or 0.29%, at 33,878.30, the S&P 500 was down 7.73 points, or 0.19%, at 4,147.14, and the Nasdaq Composite was down 23.20 points, or 0.19%, at 12,130.21. Chipmakers including Micron Technology , Qualcomm Inc and Intel Corp were down between 1% and 2% after European giant ASML Holding NV noted some signs of caution among customers. The Philadelphia SE Semiconductor index dropped 1.4%. Earnings from regional banks were mixed, with Citizens Financial Group Inc falling 2.3% after its first-quarter results missed estimates.
Western Alliance Bancorp rallied 15.6% as brokerages remained optimistic on the regional bank following better-than-expected earnings. Shares of First Republic Bank , Zions Bancorporation and Pacwest Bancorp rose between 3% and 7.3%. Declining issues outnumbered advancers by a 2.17-to-1 ratio on the NYSE and a 1.60-to-1 ratio on the Nasdaq. The S&P index recorded 12 new 52-week highs and one new low, while the Nasdaq recorded 35 new highs and 96 new lows. (Reporting by Sruthi Shankar and Ankika Biswas in Bengaluru Editing by Vinay Dwivedi)
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