The S&P 500 inched higher on Wednesday and the dollar weakened as investors weighed solid company earnings against weaker-than-expected economic data and ongoing wrangling in Washington on raising the debt ceiling.
Tech shares (.SPLRCT) did the heavy lifting, keeping the benchmark index in positive territory, its gains held in check by weakness in economically-sensitive sectors such as industrials (.SPLRCI) and transport (.DJT).
“Megacaps are doing well based on strong earnings,” said Bill Northey, senior investment director at U.S. Bancorp in Helena, Montana. “Beneath the surface we’re seeing narrow breadth.”
Upbeat earnings from Microsoft (MSFT.O), Alphabet Inc (GOOGL.O) and Boeing Co (BA.N) took the sting out of some disappointing economic data, which suggested weakening corporate expenditures on core capital goods.
“Monthly durable goods reports are historically quite volatile.” Northey added. “(But) the broader trend fits within the mosaic of a decelerating U.S. economic environment.”
Ongoing congressional wrangling over raising the federal debt ceiling also added to investor anxieties.
“The debt ceiling represents a potential event risk which would be negative for capital markets,” Northey said.
The Dow Jones Industrial Average (.DJI) fell 42.01 points, or 0.13%, to 33,488.82, and the S&P 500 (.SPX) gained 8.73 points, or 0.21%, to 4,080.36.
European stocks veered sharply lower, and were on track for their largest one-day percentage drop in a month as banking sector jitters offset solid Microsoft and Alphabet earnings.
The pan-European STOXX 600 index (.STOXX) lost 0.92% and MSCI’s gauge of stocks across the globe (.MIWD00000PUS) gained 0.09%.
Emerging market stocks rose 0.34%. MSCI’s broadest index of Asia-Pacific shares outside Japan (.MIAPJ0000PUS) closed 0.25% higher, while Japan’s Nikkei (.N225) lost 0.71%.
Benchmark 10-year Treasury yields steadied while yields on short-term Treasuries tumbled ahead of a possible vote on the U.S. debt ceiling.
Benchmark 10-year notes fell 2/32 in price to yield 3.4033%, from 3.398% late on Tuesday.
The 30-year bond fell 1/32 in price to yield 3.6542%, from 3.652% late on Tuesday.
The U.S. dollar softened against a basket of major world currencies as the previous session’s flight to safety faded and the euro gained strength
The dollar index fell 0.46%, with the euro up 0.68% to $1.1047.
The Japanese yen strengthened 0.25% to 133.38 per dollar, while Sterling was last trading at $1.2475, up 0.54% on the day.
Crude prices extended their losses as weak economic data further fueled fears of an economic downturn.
U.S. crude fell 0.23% to $76.89 per barrel and Brent was last at $79.86, down 0.92% on the day.
Gold prices were steady as the precious metal flirted with the key $2,000 per ounce level amid ongoing turmoil surrounding the U.S. banking sector.
Spot gold was last down 0.08% at $1,997.92 an ounce.