By Lisa Pauline Mattackal, Purvi Agarwal and Carolina Mandl
(Reuters) – The tech-heavy Nasdaq gained ground on Tuesday to end a choppy session up as Treasury yields retreated and investors awaited more earnings to assess the health of American companies.
“The last couple of days, the market has been trying to digest the move in treasuries as you’ve had a pretty big backup in yields. So the relative calm today in the treasury market brought a little bit of ease,” Jack Janasiewicz, portfolio manager at Natixis Investment Managers Solutions.
According to preliminary data, the S&P 500 lost 2.89 points, or 0.05%, to end at 5,851.09 points, while the Nasdaq Composite gained 32.38 points, or 0.17%, to 18,572.38. The Dow Jones Industrial Average fell 6.18 points, or 0.01%, to 42,925.42.
Almost half of the S&P sectors was in the positive territory, with the consumer staple leading the pack.
The change in the Nasdaq direction came after the benchmark 10-year note yields earlier reached 4.222%, the highest since July 26, as investors reassessed expectations for the Federal Reserve’s policy trajectory. But yields dialed back.
“The big story overall is the rates back up and the concerns that the Federal Reserve made a policy error by moving too aggressively in September. That’s feeding through to a rate sell off on a global basis,” said Michael Green, portfolio manager at Simplify Asset Management.
On the corporate front, GE Aerospace slumped despite raising its profit forecast for 2024, as persistent supply constraints impacted its revenue. It pulled the broader Industrials index lower.
Overall the broader technology sector was up after Treasuries retreated. Microsoft (NASDAQ:MSFT) jumped.
“During the earnings season, you often get this kind of choppiness, but there’s also increased uncertainty relative to the interest rate direction,” said Chuck Carlson, CEO at Horizon Investment Services.
The next few weeks are likely to be volatile for equity markets, as investors scrutinize company earnings, fresh economic data and results of the U.S. election, followed by a central bank meeting.
Traders are pricing in a 91% chance of a 25-basis-point interest-rate cut in November, according to CME’s FedWatch.
Among other earnings, Verizon (NYSE:VZ) fell as the telecom giant missed estimates for third-quarter revenue.
3M slipped, reversing its premarket gains, despite raising the low end of its full-year adjusted profit forecast.
Meanwhile, General Motors (NYSE:GM) leapt after the legacy carmaker’s third-quarter results beat Wall Street estimates, while Lockheed Martin (NYSE:LMT) dipped after results.
Rate-sensitive homebuilding stocks slipped, with the PHLX Housing index dropping, dragged down by a fall in shares of PulteGroup (NYSE:PHM) despite the company beating profit and revenue estimates.
“The earnings themselves have been pretty good, it’s just the companies highly sensitive to interest rates are probably going to find a bit of headwind right now as investors sort out the whole interest rate story,” Carlson said.
Baker Hughes and Texas Instruments (NASDAQ:TXN) are scheduled to report earnings after the bell.
