Nasdaq down 1% as higher returns put pressure on stocks

Stocks fell on Wednesday as Wall Street struggled to extend its rally despite another strong boost from corporate earnings.

The Nasdaq Composite lost 1%. The S&P 500 fell 0.8%. The Dow Jones fell 160 points, or 0.5%. The three averages fluctuate between gains and losses in morning trading.

The moves came even as Netflix shares rose 13% after the streaming giant Reported earnings and revenue that beat estimates and strong subscriber growth for the third quarter. United Airlines jumped more than 7% after also beating estimates on the top and bottom lines.

The strong start to earnings season comes as many on Wall Street have reset their earnings forecasts lower, and investors are concerned about a recession. Despite the stock rally in the first two days of the week, Treasury yields remain high and rose on Wednesday, indicating that recession fears remain.

The 10-year Treasury yield jumped sharply to 4.12% on Wednesday.

“If I keep things simple and say 10-year Treasury is the risk-free rate at which the majority of the other asset classes in the world are priced… that would result in volatile markets across the board,” said Keith Lerner, CIO and chief market strategist at Trustist. Advisory Services, on the volatility of the bond market.

“The market in general is kind of hanging there, I don’t want to say that very well, but not as bad as we would consider 4% to be a really stressful dividing line for stocks,” Lerner added.

Among the biggest losses on the Nasdaq was Chinese tech stock JD.com, down more than 4%. Abbott Labs was one of the worst performers in the S&P 500, falling more than 7% despite beating expectations for the third quarter.

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Tech earnings will be in full swing next week, but IBM and Tesla are about to announce on Wednesday. Social media company Snap will report back later in the week.

In economic data, investors are looking forward to housing starts on Wednesday. It will also release the so-called “Beige Book” of the Federal Reserve, which is the central bank’s report on the current state of economic conditions.

Wednesday’s moves came after another strong day for stocks, with the Dow Jones climbing nearly 337 points on Tuesday, and the S&P 500 up 1.1%.

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