Stock Market Today – 4/20: Stocks Mixed As Treasury Yields Rise, Earnings Underwhelm

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Updated at 4:13 pm EST

U.S. stocks powered higher Wednesday, while Treasury bond yields crept modestly lower and oil prices jumped, as investors kept risk appetite in check amid a bumpy start to the first quarter earnings season and ongoing concerns over the impact of a hawkish Federal Reserve.

Tech stocks were also on the move, with the Nasdaq called modestly lower, after a grim first quarter earnings report and outlook from Netflix  (NFLX) – Get Netflix, Inc. Report that more than offset an optimistic set of numbers this morning from ASML NV  (ASML) – Get ASML Holding NV Report, which noted robust demand for its extreme ultraviolet lithography systems, or EUV, machines, which design complex chips used by, sector titans such as Samsung Electronics, Intel INTC and Taiwan Semiconductor TSM and cost as much as €100 million each

The focus on tech stocks was paired with another significant move in the bond market, where benchmark 10-year note yields eased to 2.84% after turning their first “real yield” in late Tuesday trading — a move that occurs when the yield remains positive after subtracting for inflation expectations — for the first time in more than two years.

“The near-term uncertainty regarding the inflation outlook as well as the Fed’s expected response to stubbornly high increases in consumer prices have driven yields higher this year,” said LPL fixed income strategist Lawrence Gillum. “This largely one-way move higher in yields has caused returns for most fixed income indexes to be among the worst to start the year in decades.”

“However, the silver lining in this historic selloff is that higher yields generally mean higher potential returns,” he added. “And with interest rates higher than they’ve been over the past few years, now could be a good time to revisit fixed income as an investment.”

Such a move makes stocks less attractive than risk-free government bonds, and comes during a disappointing start to the first quarter earnings season, where collective S&P 500 profits are only likely to grow 6.1% from last year to a share-weighted total of $432.2 billion, according to Refinitiv data, a pace that would be down sharply from the 32.1% clip recoded over the final three months of last year.

Elsewhere, global oil prices added to recent gains after Energy Department data showed U.S crude stockpiles fell 8 million barrels last week, with WTI crude futures for June delivery rising 40 cents to $102.45 per barrel. 

Last night, the American Petroleum Institute said U.S. inventories fell by 4.5 million barrels over the week ending April 15.

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In Europe, the region-wide Stoxx 600 closed 0.85% higher by mid-afternoon Frankfurt trading as a series of solid earnings, a well as a weaker euro, provided initial support, while the MSCI ex-Japan benchmark ended its session with a modest 0.25% advance.

On Wall Street, the Dow Jones Industrial Average closed 249.59 points higher while the S&P 500, which is down 1.5% for the month, closed 2.76 points lower. The tech-focused Nasdaq fell 166.59 points.

Netflix shares plunged 35%, pulling the stock back to levels last seen in late 2019 and wiping more than $45 billion from its market value, after a surprise exodus in paid subscribers, and a grim near-term outlook, prompted a re-think on advertising sales from the world’s biggest online streaming service.

Walt Disney  (DIS) – Get Walt Disney Company Report shares closed 5.55% lower at $124.58 each, while Comcast  (CMCSA) – Get Comcast Corporation Class A Report fell 1.48% to $47.40 each and Paramount Global  (PARA)  slumped 8.6% to $33.16 each.

International Business Machines  (IBM) – Get International Business Machines Corporation Report shares closed 7.1% higher after the cloud-computing focused tech giant posted stronger-than-expected first quarter earnings linked to robust demand from global businesses ramping-up IT spending for the coming year.

Dow component Procter & Gamble  (PG) – Get Procter & Gamble Company Report gained 2.66% after posting stronger-than-expected first quarter earnings Wednesday, while boosting its full-year sales forecast, as the consumer staples group sees firming demand that could offset rising commodity costs. 

Tesla  (TSLA) – Get Tesla Inc Report shares fell 4.96% lower ahead of the clean-energy carmaker’s first quarter earnings after the close of trading with investors focused on the group’s profit margins following record deliveries and rising input costs.

Twitter  (TWTR) – Get Twitter, Inc. Report shares moved 1.21% higher after billionaire Tesla CEO Elon Musk dropped yet another hint that he plans to take his $43 billion takeover bid for the social media group directly to investors.

After Tweeting the words “Love me Tender” to his 81 million followers last week, Musk again alluded to the word ‘tender’ in a Tweet channeling F. Scott Fitzgerald’s 1934 novel ‘Tender is the Night’.