Nasdaq Tumbles Amid Negative Reaction To Tech Earnings News

With a negative reaction to quarterly results from some big-name technology companies weighing on the markets, stocks have moved mostly lower during trading on Wednesday.

The tech-heavy Nasdaq has shown a particularly steep drop, extending the pullback seen in the previous session. Currently, the Nasdaq is just off its lows of the session, down 247.55 points or 1.6 percent at 15,262.34.

The S&P 500 is also down 43.30 points or 0.9 percent at 4,881.67, while the narrower Dow has bucked the downtrend and inched up 25.82 points or 0.1 percent at 38,493.13.

A steep drop by shares of Alphabet (GOOGL) is weighing on the tech sector, with the Google parent tumbling by 6.4 percent.

Alphabet is under pressure after reporting fourth quarter results that beat estimates on the top and bottom lines but weaker than expected ad revenue.

Chipmaker Advanced Micro Devices (AMD) has also slumped by 4.5 percent after reporting fourth quarter earnings in line with estimates but providing disappointing first quarter guidance.

Shares of Microsoft (MSFT) have also moved to the downside after the software giant reported better than expected fiscal second quarter results but forecast third quarter revenues below estimates.

Meanwhile, the uptick by the Dow comes as shares of Boeing (BA) have surged by 3.9 percent after the aerospace giant reported a narrower than expected fourth quarter loss.

Traders are also looking ahead to the Federal Reserve’s highly anticipated monetary policy announcement this afternoon.

While the Fed is widely expected to leave interest rates unchanged, the accompanying statement could have a significant impact on the outlook for rates.

Optimism about a March rate cut has faded recently, with many economists now suggesting the Fed will wait until May to begin lowering rates.

In U.S. economic news, payroll processor ADP released a report showing private sector job growth in the U.S. slowed by more than expected in the month of January.

ADP said private sector employment rose by 107,000 jobs in January after climbing by a downwardly revised 158,000 jobs in December.

Economists had expected private sector employment to increase by 145,000 jobs compared to the addition of 164,000 jobs originally reported for the previous month.

Sector News

Networking stocks are turning in some of the market’s worst performances on the day, with the NYSE Arca Networking Index tumbling by 2.4 percent. The index is pulling back further off the six-month closing high set on Monday.

Semiconductor and software stocks are also seeing significant weakness, contributing to the steep drop by the tech-heavy Nasdaq.

Considerable weakness is also visible among oil service stocks, as reflected by the 1.5 percent loss being posted by the Philadelphia Oil Service Index. The weakness in the sector comes amid a notable pullback by the price of crude oil.

Meanwhile, gold stocks have shown a strong move to the upside along with the price of the precious metal, driving the NYSE Arca Gold Bugs Index up by 1.7 percent.

Interest-rate utilities and commercial real estate stocks are also seeing some strength ahead of the Fed’s monetary policy announcement.

Other Markets

In overseas trading, stock markets across the Asia-Pacific region turned in a mixed performance during trading on Wednesday. Japan’s Nikkei 225 Index climbed by 0.6 percent, while China’s Shanghai Composite Index tumbled by 1.5 percent.

Meanwhile, the major European markets have all moved to the downside on the day. While the German DAX Index has fallen by 0.4 percent, the U.K.’s FTSE 100 Index and the French CAC 40 Index are both down by 0.1 percent.

In the bond market, treasuries have moved sharply higher ahead of the Fed’s monetary policy announcement. Subsequently, the yield on the benchmark ten-year note, which moves opposite of its price, is down by 9.6 basis points at 3.963 percent.