By Stephen Culp
NEW YORK (Reuters) - The S&P 500 ended a three-day winning streak on Wednesday as dour earnings guidance added to mounting fears of a global economic slowdown.
But those fears, along with a smaller-than-expected interest rate hike from the Bank of Canada, continued to feed hopes that the Fed might consider easing the size of its rate hikes after its Nov. 1-2 policy meeting.
"Today the market is catching up with the move upward over the last week or so," said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. "There are still two Fed meetings ahead of us this year."
Paul Kim, Chief Executive Officer at Simplify ETFs in New York, agrees.
"Central banks are starting to blink," Kim said. "It’s part of the larger trend and supports the pivot narrative."
GRAPHIC: Central banks ramp up fight against inflation https://graphics.reuters.com/EUROZONE-MARKETS/movakmlgxva/chart.png
The S&P 500 and the Nasdaq ended in negative territory, dragged lower by market-leading tech and tech-adjacent companies following results from Microsoft (NASDAQ:MSFT) and Alphabet (NASDAQ:GOOGL).
Microsoft and Alphabet shares ended the session sharply lower.
Those gloomy reports brought worries over an impending global economic downturn from simmer to boil, and spread to other high profile megacaps. Meta Platforms is expected to post results shortly.
Sales of newly constructed U.S. homes plunged in September while mortgage rates hit their highest level in more than two decades, adding to the growing pile of data suggesting a softening economic landscape.
According to preliminary data, the S&P 500 lost 28.89 points, or 0.75%, to end at 3,830.22 points, while the Nasdaq Composite lost 229.67 points, or 2.05%, to 10,969.45. The Dow Jones Industrial Average rose 3.49 points, or 0.01%, to 31,840.23.
Third quarter earnings season has shifted into high gear, with 170 of the companies in the S&P 500 having reported. Of those, 75% have delivered consensus-beating results, according to Refinitiv.
But they have a low bar to clear. Analysts see aggregate S&P 500 earnings growth of 2.3%, down from 4.5% at the beginning of the month, per Refinitiv.
"There have been pockets of promising corporate earnings announcements this quarter," Keator added. "I don’t think it's necessarily a fait accompli that we’re going to continue to see earnings misses across the board."
Boeing (NYSE:BA) Co reported a deeper than expected third quarter loss, sending its shares sliding.
On the plus side, Visa Inc (NYSE:V) advanced in the wake of the consumer credit company's profit beat.
(This story has been corrected to delete reference to Apple (NASDAQ:AAPL) earnings)