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U.S. stocks were flat Wednesday as investors digested another flurry of corporate earnings, including Morgan Stanley (MS).
The S&P 500 (^GSPC) was little changed at the close, while the Dow Jones Industrial Average (^DJI) slid by 0.23%. The technology-heavy Nasdaq Composite (^IXIC) ended the trading session above the flatline.
Bonds yields were higher after Britain’s inflation rate slowed last month but remained above 10%. The yield on the 10-year note climbed to 3.59%, while rate-sensitive 2-year note yields rose to 4.25% Wednesday.
Oil prices fell, gold dipped to around $2,000 an ounce as the dollar strengthened.
Wall Street continued to be fixated on any indicators about the Fed’s next policy move. According to the Fed’s Beige Book survey released Wednesday afternoon, inflation and hiring slowed across the 12 Fed districts, and lending volumes and loan demand among businesses and consumers declined.
Stocks had closed flat on Tuesday amid an earnings parade that included results from Bank of America (BAC) and Goldman Sachs (GS).
On Wednesday, Morgan Stanley came into the mix, reporting that its first-quarter profit fell amid continued pressure on its investment banking unit. Shares were up near 0.5%.
One of the sore losers after the closing bell on Tuesday was Netflix (NFLX). The stock sank more than 10% after the streaming giant posted mixed results as it pulled back on its crackdown for password sharing. It pared losses, however, and was down 3% Wednesday.
The story was different for Western Alliance (WAL). The regional lender said that its deposits climbed by $2 billion at the end of the first quarter. The stock rallied over 23% Wednesday, leading the gains among the regional bank stocks that were hit by last month’s turmoil.
First Republic Bank (FRC) surged over 12%, Zions (ZION) up more than 7% ahead of its earnings. The KBW Nasdaq Regional Banking Index (^KRX) gained 3%, outperforming the KBW Nasdaq Bank Index (^BKX) on Wednesday.
More earnings are on tap this week. On Wednesday, Zions (ZION), Tesla (TSLA), and International Business Machines Corporation (IBM) are due after the market closes.
Meanwhile, US Bancorp (USB) posted higher revenue for the first quarter on the back of rising interest rates and its acquisition of MUFG Union Bank. The stock edged up over 2% following the results.
With earnings season heating up this week, “82% of companies are beating and by a margin of 7.6%. The earnings recession wallop the bears are expecting has not materialized,” the team at Fundstrat Global Advisors wrote in a note to clients. “1Q23 earnings season will ultimately enable the S&P 500 to push to new highs for the year,”
Meanwhile, little volatility as of late has enabled a continued easing in financial conditions, which in turn has “helped cement investors’ conviction that the Fed [is] set to deliver another hike in just two weeks’ from now, which was supported by the latest round of FOMC speakers,” Jim Reid and colleagues at Deutsche Bank wrote in a note to clients.
St. Louis Fed President James Bullard said on Tuesday in an interview that “Wall Street’s very engaged in the idea there’s going to be a recession in six months or something, but that isn’t really the way you would read an expansion like this.” Bullard also didn’t rule out more interest rate hikes.
Separately, Atlanta Fed President Raphael Bostic said he favors another rate hike and then holding them above 5% for “quite some time.”
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