Nasdaq S&P 500 fall on growth shares

The Nasdaq and the S&P 500 fell on Thursday as rising yields weighed on megacap growth stocks, while a slew of Wall Street lenders reported mixed earnings on the last day of a holiday-shortened week.

Twitter Inc gained 2.9 per cent after Tesla Inc CEO Elon Musk offered to buy the social media company for about $US41 billion. The electric-car maker’s shares fell 2.9 per cent.

Six of the 11 major S&P 500 sectors declined in early trading, with technology and consumer discretionary stocks leading losses.

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Megacap growth names such as Amazon.com Inc and Apple Inc fell about 1 per cent each as Treasury yields rose after data showed initial claims for state unemployment benefits were higher than expected, while the rise in retail sales was just shy of estimates.

The benchmark 10-year Treasury yield was up 2.77 per cent, after falling as much as 2.65 per cent earlier in the day.

Growth stocks have been hammered in the last few weeks as Treasury yields rallied on signals from the US Federal Reserve that it will hike rates aggressively to control soaring inflation.

Morgan Stanley and Citigroup Inc rose 1 per cent each on beating analyst expectations for profit despite a sharp drop in first-quarter earnings.

Goldman Sachs Group Inc edged lower on reporting a 43 per cent drop in profit, while Wells Fargo & Co fell 4 per cent following a 21 per cent drop in quarterly profit.

“The banks reflect some of the concerns that investors have with the market in general,” said Rick Meckler, partner at Cherry Lane Investments in New Vernon, New Jersey.

“The inflation has helped them on the revenue side, but hurt them on the cost side … when you consider the types of reserves they feel they need to take, they’re not producing the bottom line growth that markets become very addicted to.”

Half an hour after the open, the Dow Jones Industrial Average was up 152.95 points, or 0.44 per cent, at 34,717.54, the S&P 500 was down 15.52 points, or 0.35 per cent, at 4,431.07, and the Nasdaq Composite was down 127.60 points, or 0.94 per cent, at 13,515.99.

Overall, analysts have been less optimistic about earnings this quarter amid the ongoing war in Ukraine, soaring inflation and a more hawkish Fed.

Aggregate annual S&P 500 earnings growth for the first three months of 2022 is estimated at 6.3 per cent, compared to 32.1 per cent in the previous quarter, according to IBES data from Refinitiv.

US retail sales increased in March, mostly boosted by higher petrol and food prices, but consumers are showing signs of cutting back on discretionary spending amid high inflation.

Declining issues outnumbered advancers for a 1.16-to-1 ratio on the NYSE and a 1.35-to-1 ratio on the Nasdaq.

The S&P index recorded 27 new 52-week highs and six new lows, while the Nasdaq recorded 49 new highs and 89 new lows.

Nasdaq, S&P 500 fall on growth shares
Independent Information