Tech Shares Rise Amid Mixed Earnings; Yields Drop: Markets Wrap

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(Bloomberg) — Shares of technology stalwarts rose while the broader U.S. equity market was mixed amid a slew of earnings reports, a decline in commodity prices and renewed concerns about economic growth. Bonds gained.

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Google parent Alphabet, Amazon.com and Tesla pushed the tech-heavy Nasdaq 100 higher for a third day. The S&P 500 and Dow Jones Industrial Average fluctuated between gains and losses after setting closing record highs Tuesday. McDonald’s Corp., Coca-Cola Co. and Kraft Heinz Co. climbed after positive results. Microsoft Corp. also advanced after upbeat reports late Tuesday. Robinhood slumped after missing revenue estimates. Visa Inc. and General Motors Co. declined.

Mining and energy stocks led a retreat in the Stoxx Europe 600 index as prices of raw materials including aluminum and iron ore fell along with crude oil. Germany’s DAX underperformed after Europe’s biggest economy cut its 2021 growth forecast, citing the lingering effects of the pandemic and a supply squeeze. Bund yields dropped along with those on other European bonds.

Some of Wednesday’s major earnings from Europe:

  • Deutsche Bank AG dropped more than 6% after disappointing earnings, while Banco Santander SA declined despite a bullish outlook.

  • Heineken NV fell after reporting a drop in demand for beer.

  • BASF SE slipped after flagging dwindling returns on its core suite of chemical products as sputtering global supply catches up with demand.

  • GlaxoSmithKline Plc rose on an improved profit outlook.

  • Dutch semiconductor equipment maker ASM International NV advanced after revenue forecasts beat analyst estimates.

  • Puma SE gained after raising full-year profit forecasts.

Equities fell in Japan, and Chinese technology shares slid on concerns about more scrutiny from Washington after the U.S. banned China Telecom’s American business. Treasury yields inched lower and the dollar slipped.

Investors are counting on earnings to support equity prices, and so far the reporting season has been solid overall. But worries remain that over time rising raw material and wage costs and supply-chain snarls could crimp margins and weigh on the global economy recovery.

“While some prominent earnings misses have clouded the picture, the reality is that on aggregate, the reporting season so far has been very solid,” said Max Kettner, a multi-assets strategist at HCBC Holdings Plc. “Everyone, literally everyone, in the market right now is worried about supply-chain constraints, higher input costs and the like, so headwinds from this side are now very well reflected in near-term earnings expectations.”

The debt crisis in China’s property sector continues to hang over the market: authorities told billionaire Hui Ka Yan to use his personal wealth to alleviate China Evergrande Group’s woes. Meanwhile, a top Chinese regulator called on companies to make “active preparations” to meet payments on offshore bonds.

Elsewhere, gilt yields fell after Chancellor of the Exchequer Rishi Sunak said the U.K. is on course to post the fastest growth rate since 1973, and flagged inflation as the most important immediate threat.

Bitcoin plunged below $60,000. On the virus front, a Food and Drug Administration panel gave its backing to the Pfizer Inc. and BioNTech SE vaccine for young children.

Here are some events to watch this week:

  • Earnings: Amazon, Apple, Samsung Electronics, China Vanke, PetroChina, Ping An Insurance Group

  • Australia CPI, Wednesday

  • U.S. wholesale inventories, U.S. durable goods, Wednesday

  • Bank of Japan monetary policy decision, briefing, Thursday

  • ECB rates decision, President Christine Lagarde briefing, Thursday

  • U.S. GDP, initial jobless claims, Thursday

  • G-20 joint finance and health ministers meeting ahead of the weekend leaders’ summit, Friday

For more market analysis, read our MLIV blog.

Some of the main moves in markets:

Stocks

  • The S&P 500 rose 0.1% as of 9:50 a.m. New York time

  • The Nasdaq 100 rose 0.5%

  • The Dow Jones Industrial Average was little changed

  • The Stoxx Europe 600 fell 0.2%

  • The MSCI World index was little changed

Currencies

  • The Bloomberg Dollar Spot Index fell 0.1%

  • The euro rose 0.2% to $1.1618

  • The British pound fell 0.2% to $1.3744

  • The Japanese yen rose 0.6% to 113.47 per dollar

Bonds

  • The yield on 10-year Treasuries declined five basis points to 1.56%

  • Germany’s 10-year yield declined six basis points to -0.18%

  • Britain’s 10-year yield declined 13 basis points to 0.98%

Commodities

  • West Texas Intermediate crude fell 1.1% to $83.71 a barrel

  • Gold futures rose 0.2% to $1,796.60 an ounce

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