By Yasin Ebrahim
Investing.com -- The S&P 500 stumbled Wednesday, as rising Treasury yields pressured big tech stocks despite ongoing quarterly results pointing to a better-than-expected earnings season.
The S&P 500 fell 0.92%, the Dow Jones Industrial Average fell 0.59% or 179 points, and the Nasdaq was down 1.2%.
Big tech dragged the market lower, with Google (NASDAQ:GOOGL) and Microsoft (NASDAQ:MSFT) leading to the downside after the 10-year Treasury yield jumped to 14-year highs on bets the Federal Reserve is likely to persist with its aggressive rate hikes.
“Against persistent core inflation pressures, the Fed is on track to continue tightening at a faster pace than originally anticipated,” Morgan Stanley said in a note, forecasting the Fed to hike rates by 75 basis points in November, 50bps in December, and 25bps in January.
Sentiment on tech, however, was boosted somewhat by blowout results from Netflix as the streaming giant reported third-quarter results that beat on both the top and bottom lines as subscriber growth resumed.
Netflix Inc (NASDAQ:NFLX) added 2.4 million net subscribers and guided net adds of 4.5 million for the fourth quarter, prompting some on Wall Street to suggest that the company’s trend of subscriber losses were over.
“Netflix was un-ownable when net adds turned negative, and while there will always be ebbs and flows in the slate, it's now tough to see loss in future years,” Wells Fargo said in a note.
International Business Machines (NYSE:IBM) is set to kick off quarterly results for tech after the closing bell, with many expecting it to focus on how slowing enterprise spending and computer sales have impacted big blue’s results.
Fears over slowing software spending, however, were eased somewhat after Adobe Systems (NASDAQ:ADBE) reaffirmed its guidance for the third quarter, sending its shares up more than 2%.
Consumer products giant Procter & Gamble Company (NYSE:PG) climbed 1% after its quarterly results beat on both the top and bottom line, overshadowing lowered full-year revenue guidance amid a hit from a stronger dollar.
Consumer discretionary stocks fell amid pressure from homebuilder stocks after the data showed further signs of slowing in the housing market.
U.S. homebuilding fell more than expected in September, while mortgages demand fell to the lowest level since 1997 following a surge in interest rates.
PulteGroup Inc (NYSE:PHM), DR Horton Inc (NYSE:DHI) and Lennar Corporation (NYSE:LEN) were down more than 5%.