S&P 500, Dow Recover from Early Session Losses but Tech Worries Weigh on NASDAQ

The major U.S. stock indices opened lower in cash market trading after the release of a disheartening first round of major technology earnings reports late Tuesday.

The NASDAQ Composite and the S&P 500 Index opened down 2.3% and 0.9%, respectively, as tech companies generated downward pressure. The Dow Jones Industrial Average, however, bucked the mostly bearish tone with a 29 point, or 0.1% gain, on the back of strong earnings results from Visa.

The tech-driven indexes and sectors were mostly pressured by spillover selling from the premarket session. Leading the move to the downside were shares of Google-parent Alphabet and tech giant Microsoft. Other mega-cap tech stocks declined in premarket trading. Shares of Meta Platforms fell 4%, and Amazon slipped 3.8%.

Companies Outperforming the Major Indexes

Harley-Davidson shares rose 6.7% after the motorcycle maker reported beating expectations before the bell, CNBC reported. Shares of the hotel company Hilton increased 2% after reporting better-than-expected quarterly earnings. The company also increased its full-year forecast, saying it continues to benefit from strong demand to travel coming out of the pandemic. Dow component Visa was up after beating profit and revenue expectations.

Food producer Kraft Heinz shares were up 3% after reporting better-than-expected quarterly earnings. The company said it benefited from continued strength in its trash collection business and successful cost controls.

Waste Management shares jumped 3% after reporting better-than-expected quarterly earnings. The company said it benefited from continued strength in its trash collection business and successful cost controls.

Additional Disappointments

Plane maker Boeing is putting in a mixed performance despite reporting a quarterly loss and revenue below expectations. Shares of toy maker Mattel dropped 5.5% after it cut its full-year forecast and revenue came in below expectations.

US Mortgage Rate Jump to Highest Since 2001, but New Home Sales Unexpectedly Rise

The average interest rate on the most popular U.S. home loan rose to its highest level since 2001 as tightening financial conditions weigh on the housing sector, data from the Mortgage Bankers Association (MBA) showed on Wednesday.

In other news, US New Home Sales rose to 603K units, betting the 579K unit forecast. However, last month’s figure was revised lower to 677K units.

Looking Ahead…

Investors are going to be playing catch up most of the session on Wednesday as they try to recover the premarket losses fueled by the Alphabet and Microsoft misses. However, the trade could be a little tentative because Meta Platforms reports after the bell and they are expected to disappoint. Furthermore, megacap giants Amazon.com and Apple are scheduled to report after the bell on Thursday. This may be enough to keep risk conscience investors on the sidelines until early next week.

If investors decide to shrug off the bad news then this could only mean one thing, they are putting more emphasis on the possibility the Fed announces next Tuesday that it is willing to begin slowing the size of its rate increases in December.

Currently, traders are pricing in a 75 basis point rate hike in November and a 50 basis point rate hike in December.