US equities gained Wednesday as big-tech earnings overnight helped support broader sentiment amid lingering concerns about the health of US regional banks as First Republic Bank extended a slide.
(Bloomberg) — US equities gained Wednesday as big-tech earnings overnight helped support broader sentiment amid lingering concerns about the health of US regional banks as First Republic Bank extended a slide.
The tech heavy Nasdaq 100 rose 0.9% as Google parent Alphabet Inc. and Microsoft Corp. both beat first-quarter earnings expectations after the market close on Tuesday. Microsoft rose about 7.1%, while Alphabet was little changed. Meta Platforms Inc. is due to report after the bell today.
Technology shares also led gains in the S&P 500, up 0.2%, as further losses in First Republic weighed on the index. The stock plunged 49% on Tuesday after Bloomberg reported the lender is exploring divesting as much as $100 billion of assets as part of a rescue plan.
A run on deposits at First Republic has raised questions about the effect of the Federal Reserve’s aggressive rate hikes on US lenders and what the central bank can do to stop a banking crisis from spreading. Some market participants have speculated the tightening cycle may end sooner than expected, though inflation remains high. The Fed’s preferred measure of inflation, the so-called PCE deflator, is due Friday.
“The question is to what extent central banks and regulators can contain market sentiment and make clear to investors they need to keep a cool head, to give depositors confidence that there is no need to run to other banks,” said Tatjana Puhan, deputy chief investment officer at Tobam SAS. “So far the Fed has been very clear that they will continue to hike rates as long as needed to contain inflation.”
In Europe, the regional stock benchmark declined amid disappointing earnings. Software producer Dassault Systemes sank as much as 9% after missing revenue estimates. Dutch chip-tool maker ASM International slumped more than 9% after offering a tepid outlook for the rest of the year. Roche Holding AG retreated even as its first-quarter sales exceeded expectations. Meanwhile, beats from Standard Chartered Plc and Sweden’s SEB AB failed to bolster sentiment.
“The markets are very much focused on some of the earnings story, but possibly overlooking the weight of economic deceleration that is playing through right now, particularly in the United States,” John Woods, Asia Pacific chief investment officer at Credit Suisse Group AG, said on Bloomberg Television. “I’m looking at a whole range of technical signals, which seem to be suggesting a risk-off environment.”
Treasury yields were steady after the benchmark 10-year yield fell nine basis points Tuesday and the policy-sensitive two-year yield dropped 13 basis points. A gauge of the dollar declined. Most bond yields in Europe rose, though Sweden bucked the trend with the 10-year yield falling about 2 basis points after a much-anticipated Riksbank rate increase.
Elsewhere in markets, oil dipped and gold gained. Iron ore rose after a brief drop below $100 a ton for the first time since December. Bitcoin climbed.
Stocks
- The S&P 500 rose 0.2% as of 9:33 a.m. New York time
- The Nasdaq 100 rose 0.9%
- The Dow Jones Industrial Average rose 0.3%
- The Stoxx Europe 600 fell 1%
- The MSCI World index fell 1.3%
Currencies
- The Bloomberg Dollar Spot Index fell 0.5%
- The euro rose 1% to $1.1087
- The British pound rose 0.7% to $1.2500
- The Japanese yen rose 0.4% to 133.18 per dollar
Cryptocurrencies
- Bitcoin rose 6.6% to $29,830.34
- Ether rose 4.9% to $1,951.59
Bonds
- The yield on 10-year Treasuries was little changed at 3.39%
- Germany’s 10-year yield declined one basis point to 2.37%
- Britain’s 10-year yield was little changed at 3.70%
Commodities
- West Texas Intermediate crude fell 1.2% to $76.15 a barrel
- Gold futures rose 0.6% to $2,017 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Michael Msika, Tassia Sipahutar and Sujata Rao.
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