The Nasdaq and S&P 500 slipped on Wednesday as traders assessed disappointing earnings from tech giants Microsoft and Alphabet.
The Nasdaq fell 1.9%. The S&P 500 lost 0.7%. The 30-stock Dow Jones Industrial average traded 23 points higher, almost flat.
Utilities and Real Estate traded slightly negative as a sector late in the day. They joined consumer discretionary, communication services and technology in the red.
Earlier in the day, the Dow Jones gained more than 300 points as Visa supported the index with strong earnings. The S&P 500 was also positive.
Shares of Google parent Alphabet fell 6.4% after the tech giant missed expectations on the top and bottom lines. Alphabet also reported a decline in YouTube ad revenue, prompting investors to ponder the prospects of other tech companies that rely on ad spend.
Meanwhile, Microsoft was down about 6% after the tech giant reported weaker-than-expected cloud revenue in its latest quarterly results, despite higher earnings and revenue estimates. The company also released revenue guidance for the current quarter that fell short of expectations.
Swings in major indexes reflect a “standoff” between corporate America and the Federal Reserve that has left investors trying to balance what companies say and what it means for interest rate hikes, said Keith Buchanan, portfolio manager at GLOBALT Investment. He said the first of the big tech reports had a particular impact because it’s an industry that many investors are exposed to.
“The day’s intraday action is kind of a microcosm of how we’ve felt as investors over the past few weeks,” said Keith Buchanan, portfolio manager at GLOBALT Investments. “Optimism is built almost entirely on a pessimistic outlook. The pivotal optimism of the Federal Reserve only occurs in a scenario where things deteriorate faster, from a macro perspective.”
“The volatility is there, and it’s been there for a while and I think it’s probably here to stay,” he added. “Not day-to-day, week-to-week, but on an intraday basis, just because of where investors are right now.”
In other earnings news, Harley-Davidson shares rose 11.9% after the motorcycle maker reported beating expectations before the bell. Boeing lost 8.9% after the aircraft manufacturer reported quarterly loss and missed revenue forecast.
Stocks attempted a rally earlier in the day as traders tried to shrug off disappointing quarterly results from Microsoft and Alphabet.
Any of the major indexes closing in negative would end their respective three-day winning streaks.