Big Tech rally steadies stocks on Wall Street

A rally for Microsoft and other Big Tech stocks was helping to steady Wall Street Wednesday, a day after stocks tumbled to their worst drop in a month.

The S&P 500 was 0.2% lower in afternoon trading as worries about U.S. banks that hit the market a day before remain. The Dow Jones Industrial Average was down 164 points, or 0.5%, at 33,368, as of 2:30 p.m. Eastern time, while the Nasdaq composite was leading the market with a 0.7% gain.

Tech stocks pushed upward after Microsoft reported stronger profit for the first three months of the year than analysts expected. It jumped 7.4%, and it carries a huge weight on the S&P 500 because it’s the second-largest stock in the index.


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Tech stocks have been some of the year’s best performers so far as they’ve laid off workers and made other cost cuts to improve their profitability. Hopes for a coming pause from the Federal Reserve on its barrage of hikes to interest rates have also helped them in particular.

Google’s parent company, Alphabet, edged 0.2% lower following its earnings report. It turned a bigger profit than expected, but it also reported its first back-to-back drops in advertising revenue from a year earlier since it became a publicly traded company in 2004.

More Big Tech companies are scheduled to follow with their own reports soon. Facebook’s parent company, Meta Platforms, rose 1.6% ahead of its report, which is due after trading closes for the day.


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Chipotle Mexican Grill jumped 14.3% for the biggest gain in the S&P 500 after reporting stronger profit than expected. It was one of a few companies that raised hopes consumer spending could remain resilient despite a slowing economy. That’s key because it makes up the bulk of the U.S. economy.

Visa also reported stronger profit than expected for the latest quarter, another signal for consumer spending. Its stock edged 0.3% lower.

Stocks have been mostly listless in recent weeks, as Wall Street struggles with several questions. With few answers imminent, Mark Haefele, UBS Global Wealth Management’s chief investment officer, expects stocks to stay stuck in a range.

Not only are investors worried about the possibility of a recession this year, he said stocks also look expensive relative to profits. That means “the scope for upside appears limited, in our view,” he said.

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Scott Wren, senior global market strategist at Wells Fargo Investment Institute, sees the S&P 500 largely remaining within a range of 3,700 to 4,200 this year. It’s within the top half of that range, which means he’s not looking to “chase this equity rally.”

On the losing side of Wall Street Wednesday was Activision Blizzard, which fell 11.4% after U.K. regulators blocked its takeover by Microsoft on concerns it would hurt competition in the cloud gaming market.


First Republic Bank lost another 21%, a day after it nearly halved on worries about an exodus of customers in March.

They yanked more than $100 billion out of the bank during the first three months of the year after the second- and third-largest U.S. bank failures in history rattled confidence. That doesn’t include $30 billion that big banks deposited to try to build faith in their rival.

Wall Street’s focus has been on the smaller and mid-sized banks that could suffer debilitating runs of deposits from customers, similar to the ones that toppled Silicon Valley Bank and Signature Bank.

PacWest Bancorp., another bank that’s been in investors’ spotlight, rose 14.1% after reporting stronger results than expected and saying that its deposits have grown since late March. That may offer optimism that First Republic’s struggles could be specific to itself, rather than a symptom of deeper issues with the system.


All banks are contending with much higher interest rates, which have flown higher over the past year to tighten the screws on the economy and financial markets.

The Federal Reserve has hiked its key overnight interest rate to its highest level since 2007. It’s trying to rein in high inflation, but its main tool to do so is a notoriously blunt one. High rates slow the entire economy and hurt prices for investments.

That has many investors and economists preparing for a possible recession. Besides the cracks in the banking system, high rates have already slowed the housing, manufacturing and other industries. The job market, meanwhile, remains relatively solid.

A report on Wednesday showed that orders for long-lasting manufactured goods were stronger in March than expected.

In the bond market, the yield on the 10-year Treasury rose to 3.45% from 3.40% late Tuesday. It helps set rates for mortgages and other loans. The two-year Treasury yield, which more closely tracks expectations for the Fed, rose to 3.98% from 3.95% late Tuesday.

AP Business Writers Yuri Kageyama and Matt Ott contributed.