The Dow Jones Industrial Average plunged as the stock market closed sharply lower amid negative quarterly reports, including from McDonald's. But Google parent Alphabet and Microsoft rose in extended trading following quarterly reports. First Republic Bank cratered.
Only one stock attempted a breakout amid the negative action. Fiserv raced past a buy point after it posted an earnings beat.
Treasury yields skidded amid the negative action. The 10-year yield dipped 12 basis point to 3.39% while the two-year yield plunged 21 basis points to 3.93%, suggesting a flight to safety.
Oanda senior market analyst Edward Moya said a multitude of factors were contributing to the day's declines.
"U.S. stocks are softening after a mixed bag of earnings was accompanied by the return of banking jitters and news that President Biden will run for reelection," he said in a note to clients.
Nasdaq Hit As Small Caps Suffer
The Nasdaq was slammed hardest out of the major indexes, closing down 2.1%. Zscaler was a laggard here as it knifed 8.3% lower.
The benchmark S&P 500 also got mauled as it fell 1.6%. Finance stock MSCI was among the worst performers here as it dived 13.5% on mixed quarterly results.
The S&P 500 sectors all ended lower. Energy and materials were the worst performers; defensive utilities and consumer staples areas fell the least.
Small caps were getting bitten badly by the bears, with the Russell 2000 falling 2.4%. Growth stocks were also getting hit, with the Innovator IBD 50 ETF closing down 2.5%.
Dow Jones Today: McDonald's Earnings Beat, Stock Falls
The Dow Jones was faring best out of the major indexes but fell over 300 points as it closed down 1%.
Component McDonald's failed to get a boost on strong earnings. EPS popped 15% to $2.63 per share while revenue rose 4.1% to $5.89 billion. The Big Mac maker topped analyst views while traffic rose despite higher menu prices.
But the stock responded poorly to management reiterating a warning that the U.S. and Europe could be affected by a recession later in 2023. While McDonald's stock closed down 0.6%, shares remain in a buy zone above a 281.77 entry, MarketSmith analysis shows.
Johnson & Johnson fared best on the Dow Jones today as it gained 0.9%. Dow Inc. lagged as it fell 5.2%.
Google, Microsoft Earnings Beat; Alphabet, MSFT Stock Pop Late
A couple of key Big Tech earnings were released after the close, sending GOOGL and MSFT higher.
Earnings at Google parent Alphabet came in at $1.17 per share while revenue came in at $69.8 billion. Its cloud and YouTube businesses were roughly in-line with expectations.
Wall Street had seen earnings falling 14% to $1.07 per share while revenue had been expected to rise 1.3% to $68.9 billion. Alphabet also revealed the company's board had authorized a $70 billion share buyback.
GOOGL stock fell 2% in regular trading and is trading below a cup-with-handle entry of 106.69. But it jumped almost 4% after hours.
Microsoft earnings also came out late Tuesday. EPS of $2.45 was slightly better than expected while revenue came in at $52.86 billion. Azure and other cloud services grew 27%, in line with views.
Analysts had expected EPS to grow 1% to $2.24. Revenue was seen rising 3% to $51.1 billion.
Microsoft stock closed the day down nearly 2.3% but jumped about 4% in extended trading. It is trading near a flat-base entry of 276.86.
First Republic Stock Craters On Deposit Flight
First Republic Bank stock gave up all of Monday's gains and more as it did a swan dive following its earnings report.
Its $1.23 EPS was well clear of analyst views, while $1.21 billion in sales was also better than expected.
But the stock was hammered on a nearly 41% decline in deposits to $104.5 billion. The firm said in its earnings release that it is "pursuing strategic options" to stabilize itself.
FRC stock lost even more ground on its major moving averages as it fell 49.4%. Trading was halted amid the high-volume sell-off as the stock hit a record low. The San Francisco-based bank is now down more than 93% so far in 2023.
Futures Rise As Tech Titans Jump On Earnings
Sell Signals Galore Amid Stock Market Sell-Off
With today's negative action it is crucial that investors keep on top of sell signals.
Lattice Semiconductor, Cadence Design Systems, Synopsys and Workday all fell below the 50-day moving average.
Palo Alto Networks also got the boot from the prestigious IBD Leaderboard list of top stocks after undercutting its 50-day line.
Rambus was also cut loose from Leaderboard after it round-tripped gains from a 46.26 entry and dipped under its 50-day line.
Outside Dow Jones: Fiserv Stock Tests Buy Point
While the action was generally negative, there was one plucky stock making a breakout attempt.
Fiserv stock is trading in a buy zone above a flat-base entry of 119.58. The relative strength line hit a fresh high and volume was well above average.
The stock climbed after earnings popped 13% to $1.58 per share. The payments stock hiked its outlook for 2023. First it lifted projected organic revenue growth to 8%-9% from its previously announced estimate of 7%-9% growth.
Fiserv also guided for adjusted earnings per share of $7.30-$7.40; analysts had expected $7.33.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
