By Will Horner and Michael Wursthorn
Investors sold technology shares Wednesday, sapping momentum
from major stock indexes, as volatility continued to reverberate
across the market.
The Dow Jones Industrial Average opened higher, rising as much
as 234 points and setting an intraday high, after several banks
kicked off the latest earnings-reporting season with blowout profit
But the blue-chip index gave up a significant chunk of the gain
as the day wore on. Much of it evaporated after the release of a
Federal Reserve report Wednesday afternoon saying the U.S. economy
accelerated to a moderate pace and showed signs that businesses
were raising prices between February and early April.
Investors ramped up their selling of tech stocks and shares of
other high-growth companies following the release of the report,
undoing some of the group's recent gains and acting as a drag on
the broader market. Investors have soured on the tech trade
whenever signs have suggested the economy is strengthening and
inflation is rising, which would eventually lead to higher interest
rates. And higher rates dent the future earnings of tech and other
The Dow ended the session up 53.62 points, or 0.2%, to 33730.89,
off 0.2% from Friday's closing record. The S&P 500, which also
hit its highest-ever level earlier in the session, slid into the
red, shedding 16.93 points, or 0.4%, to 4124.66. And the Nasdaq
Composite fell further, declining 138.26 points, or 1%, to
The Dow held on to a gain largely thanks to bank earnings.
Goldman Sachs Group accounted for a significant chunk of the
blue-chip index's advance, rising $7.67, or 2.3%, to $335.35, after
the bank reported sharply higher profits for the first quarter,
benefiting from a turbocharged market and an economic recovery.
Investors say they are optimistic about the biggest American
companies' earnings and outlook for the rest of the year, given the
projections for a sharp economic recovery. Sizable government
stimulus measures and repeated pledges from the Federal Reserve to
continue supporting the recovery have largely helped alleviate
concerns about the pace of the reopening and the vaccination
"As the fundamentals emerge in the weeks ahead, there should be
some really eye-catching earnings data coming through and some very
strong economic data," said Paul O'Connor, head of a multiasset
team at Janus Henderson Investors. "It is about working out whether
the fundamentals are strong enough to justify what we have seen
Analysts' projections back that up that outlook. Wall Street's
forecasters predict the S&P 500 will grow first-quarter
earnings 27% from the same period a year earlier, according to
FactSet. That is sharply higher than the nearly 4% profit growth
the S&P 500 clocked in the fourth quarter of last year.
Shares of Wells Fargo gained $2.20, or 5.5%, to $41.99 after the
bank also topped analysts' earnings projections.
JPMorgan Chase, however, ticked lower, retreating $2.88, or
1.9%, to $151.21 after the bank said that first-quarter profit
nearly quintupled. Still, the KBW Nasdaq Bank Index of big lenders
Other large American businesses will report profits through the
"There has never been more bullish expectations on what
investors think they are going to hear from companies," said David
Donabedian, chief investment officer at CIBC Private Wealth
Management. "With earnings season, you get a lot of buy-the-rumor,
sell-the-news, and there is this idea that we are going to get a
blowout first quarter."
Energy stocks were the best-performing sector on a percentage
basis, rising 2.9%. The sector got a boost after Brent crude oil
prices rallied more than 4.5% after the International Energy Agency
on Wednesday raised its forecast for annual global oil demand.
Tech and consumer discretionary stocks in the S&P 500 fell
more than 1% each, while shares of communications companies slid
Also in Wednesday's trading mix was the public listing of
Coinbase Global. Shares of the cryptocurrency exchange operator
reached as high as $429.54 soon after it started trading before
settling at $328.28, up $78.28, or 31%, from its $250 reference
price, which had been set a day earlier.
Investors also got more clues on how the Federal Reserve will
eventually scale back some of the fiscal stimulus it had injected
into financial markets at the onset of the Covid-19 pandemic.
Speaking at virtual event held by the Economic Club, Fed
Chairman Jerome Powell said the central bank will begin reducing
bond purchases "well before" raising interest rates. He added the
Fed is unlikely to raise rates this year. The comments, which came
before the release of the Fed's Beige Book, appeared to have little
impact on the market.
Overseas, the Stoxx Europe 600 gauge edged up 0.2%. In Asia,
major stock indexes ended the day mostly higher. Hong Kong's Hang
Seng Index rose 1.4%, and the Shanghai Composite Index rose 0.6%.
Japan's Nikkei 225 fell 0.4%.
Write to Will Horner at William.Horner@wsj.com and Michael
Wursthorn at Michael.Wursthorn@wsj.com
(END) Dow Jones Newswires
April 14, 2021 16:51 ET (20:51 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.