In response to a decline in Alphabet stock following its most recent quarterly reports, which sent the broader technology sector lower, the Nasdaq Composite and S&P 500 also declined on Wednesday. Growth-related shares were also negatively impacted by a rise in the 10-year Treasury yield.
The S&P 500 declined by 0.5% and the Nasdaq Composite fell 1.2%. 71 points, or 0.2%, were added to the Dow Jones Industrial Average. The S&P 500 registered its first gain in six sessions on Tuesday, despite being down around 2% for the month of October.
Despite robust revenue growth and a beat on results, Alphabet’s cloud division failed analyst projections, sending its shares plunging more than 8% lower. Since October 2022, Alphabet’s stock has declined at its worst rate. On pace for its worst day since October 2022, the S&P 500 sector for communication services dropped close to 5%. The sector’s major contributor is Alphabet.
While this was happening, shares of Apple, Amazon, and other such tech behemoths fell 0.3% and 3.3%, respectively. After Thursday’s market close, Amazon is expected to release its third-quarter financial results.
Investor attention has been on corporate profits this week, but it was also on rates, which were hovering near multiyear highs. The benchmark 10-year Treasury yield increased by 7 basis points, rising above 4.90% once again. Tech shares were damaged and investors were alarmed when it moved above 5% earlier in the week.
The bond market is my primary focus, although earnings are taking up a lot of space in the headlines,” said Ed Moya, senior market analyst at Oanda. “This explosive pace of yield growth hasn’t been witnessed since 1982, and it portends catastrophe for markets.”