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Microsoft rises as quarterly results top estimates
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Alphabet gains on buyback plans, ad sales beat
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Activision Blizzard down as UK blocks Microsoft deal
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Indexes: Dow slips 0.59%, S&P up 0.30%, Nasdaq climbs 0.7%
(Updates prices, adds commentary, byline)
By Sinéad Carew, Ankika Biswas and Sruthi Shankar
April 26 (Reuters) - The tech-heavy Nasdaq advanced on
Wednesday as strong Microsoft Corp results partially
offset concerns over rising interest rates and their effect on
the U.S. economy.
Microsoft shares rose more than 7.5% following upbeat
quarterly earnings and sales, including of robust artificial
intelligence products. The results boosted companies such as
cloud computing rival Amazon.com Inc , which was up more
than 3%, and data analytics company Datadog , which
surged more than 12%. Data cloud giant Snowflake Inc rose more than 9%.
Alphabet Inc reported better-than-expected
first-quarter results and a $70-billion share
buyback plan , but its shares edged lower.
"It's really Nasdaq's turn to shine because of good results from Alphabet and Microsoft. People are more optimistic about the outlook for technology once again," said Brian Jacobson, senior investment strategist at Allspring Global investments.
"Tech is the engine on the train today pulling the rest of the market." However, the economically sensitive Dow Transports average fell more than 3%, selling off for a second straight day on Wednesday's weaker-than-expected capital goods data and Tuesday's weak United Parcel Service results. New orders for key U.S.-manufactured capital goods fell more than expected in March and shipments declined, suggesting that business spending on equipment likely remained a drag on first-quarter economic growth.
The Dow Jones Industrial Average fell 198.13 points, or 0.59%, to 33,332.7. The S&P 500 lost 12.12 points, or 0.30%, at 4,059.51.
The Nasdaq Composite index was up 0.7% or 82.69 points, at 11,881.85, according to the latest information on Nasdaq.com. Still, earnings forecasts looked way more optimistic after earnings reports late Tuesday, with analysts expecting a 3.2% contraction in first-quarter profit for S&P 500 companies compared with expectations for a 3.9% decline just a day ago.
Of the 163 S&P 500 companies that reported first-quarter profit through Wednesday, 79.8% topped analysts' expectations, as per Refinitiv IBES data. In a typical quarter, 66% companies beat estimates. "There had been a greater concern that the economy was going to slow down to a more significant extent and so far first-quarter earnings are bucking that trend and looking much stronger than anticipated," said Greg Bassuk, chief executive at AXS Investments. However, regional lender First Republic Bank's shares sank more than 20%, hitting a fresh record low for the second day in a row, on a report that the U.S. government was unwilling to engineer its rescue, after the lender reported plunging deposits earlier this week. Shares of PacWest Bancorp , another regional bank, rose more than 12% as it beat estimates for first-quarter profit and stabilized deposit outflows. The S&P 600 regional banks sub index advanced 0.4%. Meta Platforms Inc is scheduled to report results after the market close.
Investors are also keenly awaiting the Federal Reserve's monetary policy decision on May 3 for clues on policymakers' next steps regarding interest rates.
Traders have priced in a 79% chance of the U.S. central bank hiking rates by 25 basis points next week, as per CMEGroup's Fedwatch tool, with most expecting the Fed to hold rates before starting to cut them later this year. Reflecting mounting anxiety among investors, the cost of insuring exposure to U.S. sovereign debt rose to its highest since 2011, driven up by unease that the government could hit its debt ceiling sooner than expected. The U.S. House of Representatives could vote as early as Wednesday on a bill that sharply cuts spending for a decade in exchange for a short-term hike in the debt ceiling, though it was unclear if it had enough support in the Republican majority to pass. Among other stocks, Visa Inc edged down 0.4% after reporting better-than-expected second-quarter profit and betting on sustained growth in its payments business. Activision Blizzard tumbled 11.6% after UK's competition regulator prevented its takeover by Microsoft on antitrust concerns. Declining issues outnumbered advancers on the NYSE by a 1.62-to-1 ratio. The S&P 500 posted five new 52-week highs and seven new lows. (Reporting by Sinéad Carew in New York, Sruthi Shankar and Ankika Biswas in Bengaluru; Editing by Vinay Dwivedi and Richard Chang)
