By Ankika Biswas and Shreyashi Sanyal
(Reuters) -Wall Street’s main indexes struggled to gain on Wednesday as weakness in shares of Abbott countered gains in Netflix (NASDAQ:), leaving investors muddled about the ongoing earnings momentum.
Abbott Laboratories (NYSE:) tumbled 8.08% after reporting lower-than-expected growth in international medical device sales, hit by a strong dollar and supply challenges in China.
Netflix, on the other hand, jumped 13.84% after it attracted 2.4 million new subscribers worldwide in the third quarter, more than double the consensus forecast, and guided for 4.5 million additions by year end.
A surge in Treasury yields to 14-year highs in a steep selloff in U.S. government bonds on expectations of bigger interest rate hikes also added to the woes for risk assets.
Housing starts, a measure of new residential constructions, dropped 8.1% in September in the latest sign of the economy losing steam, taking a hit from the Federal Reserve aggressive monetary policy tightening and spiraling inflation.
The PHLX Housing Index fell 3.70%, adding more pain to stock markets attempting to break out of months of declines, with the three main indexes remaining deep in bear market territory.
While some gauges of the equity market’s health showed that the latest rally may be the start of a sustained move higher, many investors are awaiting signs of cooling inflation, which is way above the Federal Reserve’s target.
“We’re just in a bear market and the trend is for lower prices and the leading reason is we have high inflation and there’s some indications that it may not have peaked,” said Rusty Vanneman, chief investment strategist at Orion Advisor Solutions.
The U.S. central bank is likely to raise rates by 75-basis points for the fourth straight time this year in November.
Analysts also said that the Fed will not relax its aggressive stance until there is a visible impact on the U.S. labor market, which has so far been resilient.
At 12:19 p.m. ET, the was down 47.36 points, or 0.16%, at 30,476.44, the was down 20.32 points, or 0.55%, at 3,699.66, and the was down 68.71 points, or 0.64%, at 10,703.69.
Dow components Procter & Gamble (NYSE:) Co and Travelers Companies (NYSE:) Inc rose 2.3% and 3.0%, respectively, after the companies posted better-than expected quarterly profit.
Analysts have raised third-quarter profit growth expectations for S&P 500 companies to 3% from 2.8%, according to Refinitiv data. But it is still sharply lower than an 11.1% increase forecast at the start of July.
Tesla (NASDAQ:) Inc added 0.13% ahead of its earnings after the bell, with focus on any weakness in demand that is starting to weigh on the auto industry.
Declining issues outnumbered advancers for a 3.43-to-1 ratio on the NYSE and for a 2.64-to-1 ratio on the Nasdaq.
The S&P index recorded two new 52-week highs and seven new lows, while the Nasdaq recorded 28 new highs and 144 new lows.
