U.S. stocks pointed up Wednesday, led by the Nasdaq, as investors start to digest the big tech earnings bonanza that has kicked off this week.
Government bonds were mixed. The yield on the 10-year note slid to 3.39%, while rate-sensitive two-year note yields also declined to 3.88% Wednesday morning.
Microsoft (MSFT) rallied more than 7% Wednesday morning after the software giant reported fiscal third-quarter earnings that surpassed estimates, indicating growing strength in its AI and cloud businesses. Microsoft earned $2.45 a share, on revenue of $52.9 billion, compared to a profit of $2.22 a share, on $49.4B in sales in the year-ago period.
Microsoft’s potential acquisition of Activision Blizzard (ATVI), however, suffered a setback Wednesday morning, as UK regulators blocked the deal over competition fears. Activision stock sank about 9% Wednesday morning.
Alphabet’s (GOOGL, GOOG) first-quarter earnings showed a 2% rise in search revenues, far below the corresponding quarters from the last two years. Meanwhile, installations of the Bing app have quadrupled after it was augmented by AI. Shares were up slightly early in the trading session.
Tech stocks have fueled the equities rally so far this year, but some analysts expect the sector could come under selling pressure as it loses steam. Investors remain concerned that expectations for earnings growth will be weaker, prompting some market strategists to anticipate a pullback that has so far not yet materialized.
Separately, on the banking front, PacWest Bancorp (PACW) reported earnings after the close that topped EPS estimates, sending the stock up on Tuesday.
That action in the banking sector followed First Republic Bank’s (FRC) stock plunge of nearly 50% after the regional lender reported on Monday a larger-than-expected drop in deposits. The bank is considering asset sales, Bloomberg reported, following Silicon Valley Bank’s collapse and the turmoil in the sector. First Republic looked to extend its rout on Wednesday, as it fell around 15% Wednesday morning.
First Republic’s drastic move to the downside on Tuesday dragged down the KBW Regional Banking Index, which fell to its lowest level since November 2020.
Meanwhile, the consumer remains in good shape despite a slowdown in inflation. Visa (V) reported earnings that beat top- and bottom-line expectations for its latest quarter on Tuesday that showed continued post-pandemic rebound in international travel.
Elsewhere, mortgage applications to purchase a home climbed for the second time over the past three weeks, signaling stabilization in the housing market, according to the Mortgage Bankers Association weekly survey. Other data out on Wednesday showed that US manufactured good orders got a bounce in March from new contracts for passenger planes.
Dani Romero is a reporter for Yahoo Finance. Follow her on Twitter @daniromerotv