S&P 500 drops back towards 4,400 as yields rise ahead of long-weekend

• Major US equity indices were mixed on Thursday, with large-cap tech stocks underperforming as US yields soured.
• The S&P 500 was last down about 0.9% as investors digested the latest bank earnings ahead of the long weekend.

Major US equity indices were mixed on Thursday, with the S&P 500 last down about 0.6% and probing the 4,400 level, weighed primarily by downside in large-cap tech stocks as US yields soured. The heavily tech-weighted Nasdaq 100 was thus the underperformer of the major US indices, trading down about 1.9% and dropping back below the 14,000 level and eyeing a test of weekly lows just above 13,900.

Meanwhile, amid a strong performance in energy, consumer staple, material and industrial stocks (aided by strength in commodity prices and the market’s defensive mood), the Dow was last trading flat. US economic data in the form of a mixed March Retail Sales report and a stronger than expected Michigan Consumer Sentiment survey didn’t seem to have much of an impact on the Fed tightening narrative, nor subsequently on equity market sentiment.

Nor did remarks from influential FOMC member and NY Fed President John Williams, who threw his support behind the idea of 50 bps rate hikes at coming meetings. Meanwhile, All four of the major US banks that reported on Thursday, including Goldman Sachs, Citigroup, Morgan Stanley and Well Fargo, beat analyst earnings forecasts.

However, just as JP Morgan earnings had shown a day earlier, all showed a steep drop in the YoY rate of earnings growth in Q1 2022 compared to Q4 2021 and, at the time of writing, the S&P 500 Financials sector was down 0.6%, despite the steep rise in US bond yields on the day. Equity investors are braced for a barrage of further earnings releases in the coming week. US markets are closed on Friday for Easter festivities.