Wall Street had a mixed day on Wednesday, pulled down by a decline in high-growth stocks. Investor mood was influenced by housing market data, which showed that home sales has fallen to a two-year low. Fed released a report showing a moderate expansion of the economy amid concerns about inflation and worker shortage. Government bond yields dipped after a strong run in recent days. Two of the three major indexes ended in the red, while one closed in the green.
How Did The Benchmarks Perform?
The Dow Jones Industrial Average (DJI) rose 0.7% or 249.59 points to close at 35,160.79. Twenty-three components of the 30-stock index ended in the green, one remained unchanged, while six closed in the red.
The tech-heavy Nasdaq Composite dropped 1.2% or 166.59 points to finish at 13,453.07, due to a decline in tech stocks.
The S&P 500 lost 0.06% or 2.76 points to end at 4,459.45. Eight of the 11 broad sectors of the benchmark index closed in the green.
The Real Estate Select Sector SPDR (XLRE), the Consumer Staples Select Sector SPDR (XLP) and the Health Care Select Sector SPDR (XLV) rose 1.9%, 1.5% and 1.3%, respectively. The Communication Services Select Sector SPDR (XLC) slipped 4.3%.
The fear-gauge CBOE Volatility Index (VIX) declined 4.9% to 20.32. A total of 10.85 billion shares were traded on Wednesday, lower than the last 20-session average of 11.61 billion. Advancers outnumbered decliners on the NYSE by a 1.77-to-1 ratio. On Nasdaq, a 1.01-to-1 ratio favored advancing issues.
10-Year Treasury Yield Retreats From Multi-Year High
On Wednesday, the benchmark 10-year U.S. Treasury dropped 7 basis points to close at 2.84%, after it topped almost 3% earlier in the session. Yields have gone up recently as investors have been selling bonds amid concerns about inflation and its potential drag on the economy.
Fed Report On Economy Shows Uncertain Future
The Fed released a report on Wednesday that showed the U.S economy progressed at a moderate pace from mid-February to early April, as there was a rebound because of declining COVID-19 cases. However, inflation remains a major concern as companies found it difficult to cope with demand, which outstripped the supply of everything, from labor to goods. Supply chain backlog, a tight labor market, and high input costs — as seen in the recently released economic data — continue to pose challenges to firms’ ability to meet demand. The report also mentions that the growth outlook for the future looks clouded by the Ukraine War and the resultant rise in prices.
The Fed is expected to continue to hike interest rates at the upcoming meetings as it tries to get a grasp on spiking inflation. Several Fed officials recently struck a more hawkish tone. San Francisco Fed President Mary Daly, reputed to be a more dovish official, said she would support getting the Fed’s overnight interest rate up to about 2.5% by the year-end, emphasizing how aggressive the Fed’s policy tightening plans are.
Tech Stocks Fall As Netflix Plunges
Netflix, Inc.
NFLX
reported that it lost subscribers for the first time in a decade, and its shares fell a whopping 35.1%, marking its highest fall in a day in a decade. Netflix lost 200,000 subscribers in the first quarter, falling way short of its target of adding 2.5 million. It was hit by the discontinuity of service in Russia because of the war, leading to a loss of 700,000 subscribers. This report put pressure on the tech-focused Nasdaq as it incurred losses through the day.
Streaming competitors The Walt Disney Company
DIS
and Warner Bros. Discovery, Inc.
WBD
lost 5.6% and 6%, respectively. The Walt Disney Company carries a Zacks Rank #3 (Hold). You can see
the complete list of today’s Zacks #1 Rank stocks here
.
Economic Data
The National Association of Realtors reported that existing home sales fell for the second straight month in March to a seasonally adjusted annual rate of 5.77 million. Sales were down 2.7% from the revised February figure of 5.93 million.
U.S. commercial crude oil inventories decreased by 8 million barrels from the previous week. In the prior week, inventories had increased by 9.4 million barrels.
Stocks That Have Made Headline
United Airlines Gains Despite Q1 Earnings & Revenue Miss
United Airlines
UAL
incurred a loss of $4.24 per share in the first quarter of 2022, wider than the Zacks Consensus Estimate of a loss of $4.19 (
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