April 24 (Reuters) – The Nasdaq underperformed the S&P 500 and the Dow on Monday, pressured by top megacaps as investors awaited results from companies including Microsoft and Tesla shares fell on concerns about its spending plans.
Tesla Inc ( TSLA.O ) fell 2% after the automaker raised its 2023 capital spending forecast and cut Consumer Discretionary shares ( .SPLRCD ) to boost production.
That was the second-biggest drag on the S&P 500, behind Microsoft Corp ( MSFT.O ), which fell 1.6% after its results on Tuesday. Reports from Alphabet Inc ( GOOGL.O ), Amazon.com Inc ( AMZN.O ) and Meta Platforms Inc ( META.O ) are also on deck this week.
A rally in these stocks has supported Wall Street this year, so investors worry whether gains can continue given the bleak economic outlook.
“Tesla’s decline is unfolding and Microsoft has higher concerns than its earnings,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles.
The Dow Jones Industrial Average (.DJI) rose 9.19 points, or 0.03%, to 33,818.15; The S&P 500 (.SPX) lost 3.4 points, or 0.08%, to 4,130.12; And the Nasdaq Composite (.IXIC) was down 52.58 points, or 0.44%, at 12,019.88.
Among the S&P 500’s 11 major sectors, energy was the strongest, up 2%, while technology ( .SPLRCT ) was the weakest, down 0.7%.
Wedbush’s James Chip pointed to an underperformance in stocks, with the Philadelphia Semiconductor Index down 0.5%, likely due to global tensions with China.
U.S. stocks were steady at the start of the earnings season as stronger-than-expected results from major banks eased concerns about contagion from the regional banking crisis in March.
Of the 90 S&P 500 companies that have reported first-quarter results so far, nearly 77% topped analysts’ estimates, according to Refinitiv IBES data. The long-term average pulse rate is 66%.
Earnings forecasts have improved somewhat, with analysts expecting a 4.7% quarterly profit contraction versus a 5.1% decline estimated in early April.
Data scheduled for release this week include first-quarter US GDP, the personal consumer spending index (PCE) for March and consumer confidence for April.
Mixed data last week confirmed a 25-basis-point rate hike by the Federal Reserve, according to CME Group’s FedWatch tool, with money market traders holding a 92% chance of such a move.
Most central bank policymakers last week agreed that the central bank has more work to do to keep inflation down until the next policy meeting.
U.S. Treasury yields fell following recent signs of lower inflation and economic activity, although investors are increasingly concerned about a potential stance on the U.S. debt ceiling.
U.S. House Speaker Kevin McCarthy said the House will vote on his spending and debt bill this week amid lingering concerns that the U.S. government could hit the debt ceiling sooner than expected.
The market’s biggest drags on Monday were Amazon.com, down 0.8% and AT&T Inc ( TN ), which disappointed on Thursday’s announcement, fell more than 3% on Monday.
Among penny-stock household names, Bed Bath & Beyond ( BBBY.O ) shares fell 34%, or 10 cents, to 19 cents after filing for bankruptcy on Sunday.
First Republic Bank ( FRC.N ) was up 8% on its quarterly report. Shares of the regional bank have fallen 88% this year since the US banking crisis.
Advancing issues outnumber decliners on the NYSE by a 1.02-to-1 ratio; On the Nasdaq, a 1.61-to-1 ratio favored decliners.
S&P 500 hits 20 new 52-week highs and two new lows; The Nasdaq composite posted 59 new highs and 178 new lows.
Reporting by Shruti Shankar in Bengaluru Editing by Vinay Dwivedi
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