Nasdaq closes slightly lower for a second day as earnings season rolls on

Earnings aren't as dismal as markets expected, says Hightower's Stephanie Link

The Nasdaq closed lower Wednesday for a second day as investors studied the latest batch of corporate earnings, and assessed how the largest companies are faring amid rising rates and mounting recession fears.

The tech-heavy index dipped 0.18% to close at 11,313.36, while the S&P 500 dipped 0.02% to settle at 4,016.22. The Dow Jones Industrial Average eked out a small gain, rising 9.88 points, or 0.03%, to end at 33,743.84.

Stocks pared their losses during afternoon trading, with the Dow bouncing back from a more than 460-point tumble. At its lows, the Nasdaq shed 2.34%.

Technology bared the brunt of the session’s losses after Microsoft’s lackluster guidance fueled further growth concerns. The software giant last traded flat after falling for most of the session. Boeing finished slightly higher despite a top-and bottom-line miss.

“If the company is bearish on its own future, why should investors be bullish? That’s pretty much the message we’re getting from earnings season so far,” said Adam Sarhan CEO of 50 Park Investments.

Investors bought stocks heading into the period anticipating better-than-expected prints as companies reset and lowered expectations. But reports so far across sectors have mostly dashed those hopes as many companies share dismal outlooks, he said.

Investors are bracing for more high-profile corporate earnings this week as fears of a recession persist, with Tesla and IBM among the companies slated to post numbers after the bell. So far, more than 19% of S&P 500 companies have reported fourth-quarter earnings, with 68% of them posting stronger-than-expected results, according to FactSet.

This beat rate, however, lags historical trends, according to The Earnings Scout CEO Nick Raich. The average beat rate for fourth-quarter earnings is 79%, he pointed out in a Friday note.

As of Wednesday’s close, all three major averages are trading higher for the week, with the Nasdaq up 1.55%. The S&P and Dow are 1.1% higher.

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