The Nasdaq outperforms as investors cheer Microsoft, Transportation Dow sinks

April 26 (Reuters) – The high-tech Nasdaq closed slightly higher on Wednesday after strong Microsoft Corp results boosted tech stocks, but the S&P 500 and Dow fell on persistent concerns about weakness in the US economy and banking sector. .

Economically sensitive transportation stocks posted their weakest day in 11 months, and banking stocks fell as regional First Republic Bank hit a record low. Investors have been nervous about the banking sector since two US banks failed recently.

Shares of Microsoft rose 7.2% after upbeat quarterly earnings and sales, including strong artificial intelligence products. Its results boosted stocks in companies such as cloud computing rival Amazon.com Inc , up 2.3%; data analytics company Datadog (DDOG.O), up 10.5%; and data giant Snowflake Inc (SNOW.N), which closed up 8.5%.

Alphabet Inc (GOOGL.O) reported better-than-expected first-quarter results and a $70 billion share buyback plan, but its shares closed down 0.1%.

“The market is looking for direction on where the economy and businesses are headed. We’ve had some good earnings reports, but investors realize they’re not enough to show the path forward,” said Lisa Erickson, US President of Public Markets. Minneapolis Wealth Management Banking.

Erickson said investors await more earnings reports and a headline inflation reading on Friday as well as next week’s Federal Reserve meeting.

The Dow Jones Industrial Average fell 228.96 points, or 0.68%, to 33,301.87 points. The S&P 500 (.SPX) lost 15.64 points, or 0.38%, at 4,055.99. The Nasdaq Composite Index (.IXIC) closed up 0.47%, or 55.19 points, at 11,854.35, according to Nasdaq.com.

The S&P 500 Technology Index (.SPLRCT) was the only gainer among the 11 major industrial sectors of the benchmark, adding 1.7%. It rose at its peak of the day by 2.8%.

But Dow Transports (..N) results.

New orders for major capital goods manufactured in the United States fell more than expected in March and shipments fell, indicating that business spending on equipment is likely to remain a drag on economic growth in the first quarter.

However, the earnings outlook looked more optimistic after bullish reports Tuesday night, with analysts now expecting a 3.2% contraction in first-quarter earnings for S&P 500 companies compared to expectations for a 3.9% drop just a day earlier.

Of the 163 S&P 500 companies that reported first-quarter earnings as of Wednesday morning, 79.8% beat analyst expectations, according to Refinitiv IBES data. In a typical quarter, 66% of companies beat estimates.

However, shares of regional bank First Republic Bank (FRC.N) fell 29.8%, hitting a new record low for the second day in a row. This helped push the S&P 500 (.SPXBK) down 1.4% on the day.

Investors were jittery about the morning report that the US government was unwilling to plan a bailout, after the lender reported a deposit drop earlier this week.

Also, Bloomberg News reported, US bank regulators were considering the possibility of lowering their own ratings for First Republic, which could limit its borrowing from the Fed. The bank’s shares have fallen 96.1 percent since the start of the year.

However, shares of Bacoist Bancorp (PACW.O), another regional bank, rose 7.5% as it beat first-quarter earnings estimates and deposit outflows stabilized.

Meta Platforms Inc (META.O), Facebook’s parent company, rose nearly 10% after the bell decision on a second-quarter revenue forecast that beat analyst expectations as the digital ad market was turning to tried-and-tested platforms like Facebook and Instagram.

Activision Blizzard (ATVI.O) fell 11.4% after the UK competition regulator blocked its acquisition by Microsoft over antitrust concerns.

Declining issues outnumbered advancers on the New York Stock Exchange by 2.07 to 1. The S&P 500 posted five new highs in 52 weeks and 11 new lows.

11.06 billion shares changed hands on US exchanges compared to an average of 10.4 billion shares in the last 20 sessions.

Reporting by Sruthi Shankar in Bengaluru, Editing by Vinay Dwivedi

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