The Nasdaq was down 2% at the opening bell on Wednesday as tech companies continued to fall in the wake of poor reports from Microsoft and Alphabet.
Alphabet, the company that owns Google, announced a dramatic slowdown in its search advertisements business, which caused its shares to decline by as much as 7.6%. After Microsoft issued a warning that cloud services revenue growth had slowed, its stock fell 7.8%. Meta’s stock fell 4% before its report later on Wednesday.
The Nasdaq 100 index, which includes a lot of technology businesses, has lost upwards of 30% of its value this year as investor concerns about the future of large internet companies have increased.
The broad S&P 500 index on Wall Street started the day 0.5% down. Investors are closely examining corporate financial statements for indications that high inflation and slower GDP growth are harming firm earnings.
The average 10-year US Treasury yield dropped 0.043 percentage points to 4.06 percent on the government bond market.
The dollar lost its profits since the beginning of the month after softening by 0.5% vs a basket of six other currencies.
Chris Turner, global head of markets at ING, attributed the recent changes in the dollar more to investors looking for deals abroad than to “some type of de-rating” of the US economy. After improving for the previous two months, US consumer confidence declined in October, according to a carefully monitored indicator issued on Tuesday.
Europe’s Stoxx Europe 600 index fell 0.4%, and the Dax in Germany traded unchanged. The decisions were made at the same time that Deutsche Bank, the biggest bank in the nation, announced its best third-quarter pre-tax profit since before the financial crisis, in part because of higher interest rates.
On Thursday, the European Central Bank will convene, and it is widely anticipated that it would increase borrowing costs by 75 basis points to 1.5% for the second consecutive month in order to curb inflation, which reached 10% in the year to September.
On Tuesday, the ECB issued a warning that a sharp decline in the market for house loans was a result of restrictive monetary policy and declining consumer sentiment. However, over the same time period, businesses’ need for corporate loans increased as they struggled with rising expenses and declining demand.
However, according to Gergely Majoros, a member of Carmignac’s investment committee, investors’ “short-term fears have abated quite a bit” as a result of decreasing natural gas prices in Europe and expectations that the US Federal Reserve and ECB may start raising interest rates more gradually in the fourth quarter and into the new year.
The 10-year gilt yield dropped 0.01 percentage points to 3.61 percent in afternoon trading, showing an increase in prices, while the London Stock Exchange’s FTSE 100 index dropped 0.5%. The 30-year gilt yield increased 0.06 percentage points to 3.74 percent, approaching the last time it was this low, just before the “mini” Budget presented by the previous UK prime minister Liz Truss in late September.
Sterling rose 0.5% against the euro to €1.153 and 0.9% against the dollar to $1.157. A euro bought 86.5 pence.
Indicators in China, Hong Kong, and Japan all increased on Wednesday as shares in Asia rebounded.
