Wall Street mixed earnings/ Alphabet stock rise/ AMD earnings report/ Eli Lilly forecast cut/ U.S. Treasury yields/ Newslooks/ NEW YORK/ J. Mansour/ Morning Edition/ Wall Street remained steady on Wednesday following mixed earnings reports from major players like Alphabet and Eli Lilly. Alphabet’s strong performance buoyed tech stocks, while Eli Lilly’s forecast cuts dragged pharmaceuticals lower. Bond yields shifted amid mixed economic data, while global markets showed varied performance.
Wall Street Reacts to Mixed Earnings Reports: Quick Looks
- Alphabet’s rise: Alphabet surged 6% after exceeding profit expectations, driven by Google’s performance.
- AMD pressures tech stocks: AMD fell 9.7% after delivering mixed profit expectations and revenue forecasts.
- Eli Lilly’s decline: Concerns over Mounjaro and Zepbound weighed on Eli Lilly, sending its stock down 13.3%.
- Bond yield fluctuations: The 10-year Treasury yield dipped slightly to 4.22%, reflecting mixed economic signals.
- Global markets: European and Asian indexes were mostly down, despite a 1% rise in Japan’s Nikkei 225.
Wall Street Holds Steady Amid Mixed Profit Results, Bond Yield Shifts
Deep Look
On Wednesday, Wall Street remained mostly steady as investors digested a range of mixed earnings reports, which resulted in minor movements for major stock indexes. The S&P 500 edged down by 0.1%, the Dow Jones Industrial Average gained slightly, and the Nasdaq composite remained nearly unchanged following its record high the day prior. Key players, including Alphabet and Eli Lilly, contributed to the market’s cautious response.
Alphabet’s Surge on Earnings Beats Expectations
Alphabet, Google’s parent company, saw its stock rise by 6% after delivering a stronger-than-expected earnings report for the quarter, largely due to robust performance in its Google business. This jump marks Alphabet as the latest tech giant among the “Magnificent Seven” group to exceed growth expectations. This high level of performance is seen as critical, given that some analysts believe the group’s recent valuation surge may have outpaced actual growth prospects—even as artificial intelligence (AI) technology continues to drive a significant tech boom.
Alphabet’s positive results provided a much-needed lift for tech stocks, contrasting with results from Advanced Micro Devices (AMD), another influential company within the industry.
AMD Drags Down Chip Sector with Modest Earnings
The AI-fueled surge in chip stocks lost some ground after AMD reported earnings that met, but did not exceed, analysts’ expectations. Additionally, AMD’s revenue forecast for the end of 2024 fell slightly short of projections, causing its stock to plummet by 9.7%. This decline had a ripple effect, dampening enthusiasm across the broader tech and chip sectors.
Eli Lilly’s Troubles with Blockbuster Drugs Mounjaro and Zepbound
Pharmaceutical giant Eli Lilly took a hit, with its shares dropping 13.3% after it reported disappointing quarterly results. Concerns around inventory levels for its diabetes treatment Mounjaro and weight-loss drug Zepbound contributed to the weaker-than-expected earnings. Lilly reduced its full-year profit forecast for 2024, citing that pharmaceutical wholesalers were still working through inventories stockpiled earlier in the year.
Eli Lilly’s forecast adjustment highlights the volatility in pharmaceutical stocks, where inventory and regulatory pressures often play significant roles. The company’s downward revision impacted the healthcare sector, contributing to Wall Street’s restrained response.
Bond Market Sees Mixed Signals from Economic Data
Bond yields displayed modest fluctuations in response to conflicting economic reports. The U.S. economy’s growth slowed over the summer, though the preliminary GDP estimate released by the Commerce Department was slightly better than anticipated. Additionally, an employment report hinted at unexpectedly strong hiring among private-sector employers, which could signal positive news for Friday’s broader U.S. jobs report. Economists expect a noticeable slowdown in hiring for October, with forecasts predicting the pace of new job creation may have halved.
As the Federal Reserve maintains its efforts to manage inflation without sparking a recession, the mixed economic data could affect its future rate decisions. The Fed has recently shifted from rate hikes to cuts, aiming to support continued job growth, with investors now re-evaluating expectations for the extent of these reductions.
The 10-year Treasury yield dipped slightly to 4.22%, down from 4.26% the previous day, although it remains well above the 3.60% it reached in mid-September. Meanwhile, the two-year Treasury yield, which often reflects short-term Fed expectations, edged up to 4.11% from 4.10%, indicating continued anticipation of Fed intervention.
Global Market Reactions
Overseas, stock indexes were largely down in Europe and Asia. Europe’s markets responded cautiously to mixed earnings and economic data, while Japan’s Nikkei 225 showed a modest 1% gain, reflecting divergent reactions in global markets.
With earnings season in full swing, Wall Street investors will continue to watch for trends in corporate profitability and economic indicators that may signal longer-term economic resilience—or challenges—in the months ahead. As companies disclose more about their third-quarter performance and provide forward-looking guidance, the market’s overall direction will depend heavily on whether corporate and economic fundamentals align with investor expectations.
