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The Dow and S&P 500 ended a volatile session slightly higher Wednesday, with the two market gauges erasing early losses to turn positive in afternoon trading as strong corporate earnings appeared to overshadow an ongoing rise in bond yields.
What did stock benchmarks do?
The Dow Jones Industrial Average rose 59.7 points, or 0.3%, to 24,083.83. The blue-chip average was supported in large part by Boeing, which rallied on better-than-expected results. The indexes halted a five-day losing streak, which had been its longest string of losses since March 2017. The S&P 500 rose 4.8 points, or 0.2%, to 2,639.39.
The Nasdaq Composite Index fell 4.8 points to 7,003.74, a decline of less than 0.1%. The fractional decline came amid some weakness in large-capitalization technology names. With the slight drop, the Nasdaq fell for a fifth straight session, its longest losing streak since November 2016.
What is driving the market?
Extending a recent trend, moves in the bond market influenced trading in U.S. stocks as Treasury yields stepped higher. The yield on the 10-year note climbed 3 basis points to 3.026% and neared its highest level since December 2013.
Higher yields can weigh on stocks, as they push up borrowing costs for companies. In addition, higher yields can make bonds appear more attractive than stocks, which come with higher risk.
Earnings season also remained in focus, amid releases by a number of bellwether companies. So far this reporting season, more than 80% of the S&P 500 companies with reports out have beaten profit forecasts. However, those better-than-expected results often haven’t been enough to give shares a lift.
What are strategists saying?
“Earnings have been coming in very strong, but companies aren’t getting rewarded. At the same time, bonds are behaving badly, and with both struggling, investors are feeling nervous about the market in general,” said Michael Mullaney, director of global market research at Boston Partners. “The question becomes, where do you hide? Investors are increasingly hiding in cash.”
Despite that, Mullaney added that the double-digit profit growth expected this quarter — the fastest pace in years — “is something that we should expect to resume showing up in share prices.”
What stocks are in focus?
Boeing Co. rose 4.2% after beating first-quarter earnings expectations and hiking its 2018 earnings outlook.
Shares of Texas Instruments Inc. rose 4.7% after the electronics maker late Tuesday reported earnings ahead of forecasts.
General Electric Co. tumbled 4.3% after Moody’s Investors Service revised its outlook on the company’s ratings to negative, meaning it could downgrade it in the medium term. The news was the latest blow for the industrial conglomerate, which is already down about 20% thus far this year, and which has shed more than half its value over the past 12 months.
Edwards Lifesciences Corp. slumped 3.8% after providing a disappointing forecast in its earnings report out late Tuesday.
Exxon Mobil Corp. rose 1.5%, providing one of the biggest lifts to the energy sector, which rose 0.8% as one of the strongest-performing sectors of the day.
Comcast Corp. rose 2.7% after a flurry of news for the company. The company reported a stronger-than-expected rise in revenue and launched a formal bid for Sky . Comcast set out of the terms of a £22 billion ($30.72 billion) preconditional offer for U.K. broadcaster, trumping an offer from 21st Century Fox Inc. .
Twitter Inc. shares fell 2.4% despite better-than-expected earnings.
Northrop Grumman Corp. shares fell 2.6% even as the aerospace and defense contractor released forecast-beating earnings.
Read earnings previews for: AT&T, Ford and Facebook
What are other markets doing?
Stocks in Asia were hit by the worries over rising U.S. interest rates, with all major markets closing lower. It was the same story in Europe, where the Stoxx Europe 600 index slid 0.7%.
The dollar was boosted by rising bond yields, with the ICE U.S. Dollar Index up 0.5% at 91.19. Oil prices rose 0.4%, while gold prices declined 0.7%.