The S&P 500 fell from a record high on Wednesday as the momentum from a strong earnings season started to fade.
The Dow Jones Industrial Average dipped about 190 points, falling for the first time in four days, dragged down by Visa. The S&P 500 traded down 0.3%, while the tech-heavy Nasdaq Composite traded 0.3% higher amid a jump in Microsoft and Alphabet shares.
Microsoft shares jumped 5% after the tech company reported earnings that exceeded analysts’ estimates and the fastest revenue growth since 2018. Google-parent Alphabet also popped more than 5% following a stronger-than-expected quarterly report.
Visa’s stock slipped 6.8% after issuing a revenue outlook that some analysts considered conservative. Plus, the Justice Department is investigating Visa’s relationship with financial-technology firms, sources familiar with the matter told Dow Jones.
General Motors shares fell more than 4% even after the industrial giant topped Wall Street’s earnings and revenue estimates for the third quarter. Boeing saw its stock falling 1.4% after the aircraft maker posted a wider-than-expected loss.
Robinhood shares were getting slammed, down nearly 11% the day after the trading app reported revenue well below expectations primarily due to weakness in crypto trading. Twitter shares also fell 9% on concerns about expense guidance, despite strong earnings.
So far roughly 38% of the S&P 500 has reported earnings. Of the names that have posted quarterly updates, 83% have topped earnings expectations, while 79% have exceeded revenue estimates.
“This earnings season has been about pricing momentum and whether consumers are able to handle surging costs,” said Ed Moya, senior market analyst at Oanda. “So far it seems the consumer can handle it,” he added.
Strong results have been key to pushing the major averages to new highs. The S&P 500 has rallied more than 6% in October, on track for its best monthly performance since November 2020. The equity benchmark reached its 57th record close of 2021 on Tuesday.
Texas Instruments shares tumbled more than 4% after the company missed revenue estimates while Visa fell 6% despite beating on the top and bottom lines. Enphase Energy leaped 50% after reporting record revenue in face of supply chain headwinds.
Coca-Cola rose about 2% after the company posted a beat on the top and bottom lines and raised its outlook, saying the business was getting stronger particularly in areas where the Covid recovery has been the best.
“We see signs that there could be more gains to come in the final two months of the year,” said Ryan Detrick, chief market strategist for LPL Financial. “Seasonal tailwinds, improving market internals, and clear signs of a peak in the Delta variant all provide potential fuel for equities heading into year-end, and we maintain our overweight equities recommendation as a result.”