Stocks fall as rise in yields overshadows earnings
STORY: Wall Street snapped its two-day winning streak Wednesday as a rise in Treasury yields sapped momentum from the current earnings season and outweighed a surge in shares of Netflix.
The Dow ended a third of a percent lower. The S&P 500 closed two-thirds of a percent lower, while the Nasdaq finished down 0.8% percent.
The yield on the 10-year Treasury note touched its highest level in more than 14 years on Wednesday, as soft housing data did little to alter expectations the Federal Reserve will remain aggressive in hiking interest rates.
Jay Hatfield, chief investment officer at ICAP ETF, said the rise in yields was enough to overshadow recent strong earnings.
"Earnings are being released, which is usually good for the markets. Earnings have been strong, as 76% of companies have beaten so far. The big companies like Netflix have done well. But the problem is that the ultra hawkish Fed has driven other central banks overseas to raise rates as well, which is causing long rates to continue to increase. And that reduces the fair value of stock market and is pressuring stocks, particularly today. That's really good earnings. But rising rates, we hit 410 on that ten year that really brought the down the market."
Dow components Procter & Gamble and Travelers both rose after the companies posted better-than expected quarterly profit.
But Abbott Laboratories tumbled after reporting lower-than-expected growth in international sales of medical device, hit by a strong dollar.
Rate-sensitive megacap growth names such as Microsoft and Amazon.com fell amid rising yields.
But shares of Netflix jumped 13% after it attracted 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast.
After the close, Tesla reported third-quarter revenue that missed Wall Street estimates as the electric carmaker led by billionaire Elon Musk delivered fewer vehicles than expected.
Tesla shares slumped as much as 7% after the results.