U.S. stocks end mixed as Treasury yields ease, focus turns to earnings

NEW YORK, Oct 23 (Reuters) – Wall Street stocks closed mixed on Monday as benchmark U.S. Treasury yields backed down from 5% and investors shifted their focus to this week’s high profile earnings and closely watched economic data.

The S&P 500 ended modestly lower, while a host of interest rate sensitive momentum stocks, many of which are slated to post third quarter-results this week, buoyed the tech-laded Nasdaq Composite Index to a higher close.

The Dow Jones Industrial Average notched its fourth straight daily drop.

“The story continues to be about interest rates, and to some extent switching from ‘higher for longer’ to ‘how much higher for how much longer?'” said Oliver Pursche, senior vice president at Wealthspire Advisors in New York. “The market has accepted the idea that the Fed is not going to lower rates any time soon.”

The tech-heavy Nasdaq racked up the largest gains among Wall Street’s major indexes, while the blue-chip Dow was nominally lower.

The week ahead promises to be eventful for earnings, with reports by nearly one-third of the companies in the S&P 500.

These include megacap momentum drivers, including Microsoft Corp (MSFT.O), Alphabet Inc (GOOGL.O), Meta Platforms Inc (META.O) and Amazon.com (AMZN.O), along with heavy-hitting industrials such as General Motors Co (GM.N), Ford Motor Co (F.N) and Boeing Co (BA.N).

“With nearly a third of the S&P reporting this week, investors are hoping these ‘magnificent seven’ companies will end up surprising to the upside,” said Sam Stovall, chief investment strategist of CFRA Research in New York.

So far, 86 of the companies in the S&P 500 have posted earnings. Of those, 78% have beat expectations, LSEG data showed.

Analysts see aggregate S&P 500 earnings for the July-September period growing 1.2% year-on-year, slightly below the 1.6% growth projected at the start of the month, according to LSEG.

The Commerce Department on Thursday will announce third-quarter gross domestic product, seen accelerating to 4.3%. Its wide-ranging Personal Consumption Expenditures (PCE) report, due on Friday, is expected to show annual headline and core inflation cooling down to 3.4% and 3.7%, respectively.

“The Fed wants to slow inflation at a quicker pace than it slows economic growth, and it’s doing so,” Pursche added. “That’s the classic definition of a soft landing.”

Geopolitical turmoil is also on the radar, with market participants looking for potential signs the Israel-Hamas conflict could broaden or escalate.

According to preliminary data, the S&P 500 (.SPX) lost 7.31 points, or 0.17%, to end at 4,216.85 points, while the Nasdaq Composite (.IXIC) gained 35.31 points, or 0.27%, to 13,019.12. The Dow Jones Industrial Average (.DJI) fell 191.56 points, or 0.58%, to 32,935.72.

Walgreens Boots Alliance (WBA.O) surged after J.P. Morgan upgraded the pharmacy chain operator to “overweight” from “neutral.”

Chevron (CVX.N) fell after the company said it would buy smaller rival Hess Corp (HES.N) in a $53 billion all-stock deal. Hess shares were off as well.

Agricultural sciences firm FMC (FMC.N) tumbled after the company lowered its third-quarter revenue and earnings outlook.

Our Standards: The Thomson Reuters Trust Principles.