Dow falls as Microsoft’s dismal forecast hits tech stocks
Stocks pared their losses throughout the afternoon to close well off session lows, while S&P 500 ended lower on Wednesday as a string of corporate earnings ran the gamut from downbeat to dismal, reviving worries over the economic impact of theFederal Reserve’s restrictive policy.
The Dow edged up 9.88 points to 33,743,.84. It had been down more than 400 points. The Nasdaq slid 0.2%, and the S&P 500 was flat.
The tech-laden Nasdaq was weighed down after Microsoft, the first major technology firm to post quarterly results, offered dour guidance and raised red flags with respect to its megacap peers which have yet to report.
“We’ve had up and down days, that indicates an ongoing tug-of-war,” said Chuck Carlson, chief executive officer at Horizon Investment Services in Hammond, Indiana. “The dour guidance good news from the standpoint of what the Fed is doing is working.”
“That outcome has become the catalyst for the market one way or the other,” Carlson added. “Earnings matter but what’s really got the market’s focus is the Fed interest rate/inflation story.”
Growth stocks, however, have enjoyed a bounce in January after a battering last year, with investors now focused on earnings reports to assess the impact of the Federal Reserve’s rate hikes and to gauge whether the renewed enthusiasm for these stocks will be sustained.
![New York Stock Exchange traders](https://nypost.com/wp-content/uploads/sites/2/2023/01/dow-stocks-fall.jpg?w=1024)
“The environment may look attractive because some of these cloud companies, like Salesforce, are down so much, but people are still skeptical because we’re heading into weaker economic news,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
“We still have inflation, we still have the Fed raising interest rates, we’re seeing companies laying off thousands of peoples … We’re not completely through the cycle yet.”
An overwhelming majority of traders expect the Federal Reserve to raise interest rates by another 25 basis points in its meeting next week.
They now see the terminal rate peaking at 4.91% in June, even as Fed policymakers have repeatedly backed taking rates above the 5% level.
Data later in the week is likely to show December personal consumption expenditure index fell 0.1% from a 0.1% rise in the prior month. Fourth quarter GDP advance numbers are also awaited.