[New York Stock Market] Slight Decline Amid US Treasury Yield Surge... Nasdaq Down 0.14%

by Cho Seulkina

Published 19 Apr.2022 05:25(KST)

[Image source=Yonhap News]

[Asia Economy New York=Special Correspondent Joselgina] Major indices on the U.S. New York stock market closed slightly lower on the 18th (local time), as investors monitored earnings reports from major companies, concerns over Federal Reserve (Fed) tightening, and movements in Treasury yields. The yield on the U.S. 10-year Treasury note reached 2.88% during the session.

On the New York Stock Exchange (NYSE) that day, the Dow Jones Industrial Average closed at 34,411.69, down 39.54 points (0.11%) from the previous session. The large-cap S&P 500 index fell 0.90 points (0.02%) to 4,391.69, while the tech-heavy Nasdaq index dropped 18.72 points (0.14%) to 10,332.36. The small-cap Russell 2000 index also declined 14.85 points (0.74%) to 1,990.13.

Investors focused on first-quarter earnings reports from major companies. Bank of America (BoA) reported a roughly 12% year-over-year decrease in first-quarter earnings per share but exceeded market expectations, leading its stock to close up 3.41%. JP Morgan and Wells Fargo, which released earnings last week, rose 1.86% and 1.77%, respectively.

On the other hand, Bank of New York Mellon’s stock fell 2.28% after its operating revenue released that day fell short of expectations. Charles Schwab also slid nearly 10% amid disappointment over its earnings.

Mega tech stocks such as Meta Platforms (0.28%), Apple (-0.13%), and Microsoft (0.25%) showed mixed performance. Tesla rose nearly 2%, returning to the 1,000-dollar mark. Zoom Video dropped more than 4%. Twitter’s stock surged 7.48% after Elon Musk, Tesla’s CEO, hinted at a possible tender offer with a “Love Me Tender” tweet.

This week, earnings reports will be released from tech companies including Netflix and Tesla, airline stocks such as American Airlines, and Dow components like IBM and Johnson & Johnson. According to FactSet, 81.5% of S&P 500 companies have reported earnings per share above expectations, indicating a smooth earnings season. So far, only 7.5% of companies have reported. Experts estimate that S&P 500 companies’ first-quarter earnings per share increased by 5.3%.

Michael Wilson, Morgan Stanley’s equity strategist, said, “In the past two weeks, earnings revisions for the S&P 500 have resumed downward and are approaching negative territory again,” suggesting that first-quarter earnings may disappoint compared to expectations.

The Fed’s tightening stance and Treasury yield movements were also key market concerns that day. The 10-year Treasury yield briefly hit the 2.88% range during the session, the highest level since late 2018. Sam Stovall, chief investment strategist at CFRA, said, “The biggest question is how steadily and how much the 10-year yield will rise,” and predicted, “The Fed will implement a 0.5 percentage point hike at the next meeting.”

The World Bank (WB) lowered its global economic growth forecast by nearly 1 percentage point this year. David Malpass, World Bank President, stated during a conference call that due to the economic damage caused by Russia’s invasion of Ukraine, the global economic growth forecast for this year has been revised down from 4.1% to 3.2%.

Oil prices rose. On the New York Mercantile Exchange, May West Texas Intermediate (WTI) crude oil closed at $108.21 per barrel, up $1.26 (1.2%) from the previous session. This is the highest level since March 25. The rise is interpreted as a result of market concerns over continued Western sanctions on Russia and reports that protesters stormed Libya’s state oil facilities, disrupting crude production.

Due to the impact of Russia’s invasion of Ukraine pushing up grain prices, July corn futures on the Chicago Board of Trade (CBOT) rose 2.6% to $8.04 per bushel (approximately 25.4 kg). This is the first time corn futures have surpassed the $8 per bushel level since September 2012. Wheat futures also surged as much as 3.5% during the session.