Stocks Tumble On Interest Rate Worries; AT&T, Ryan Specialty, Alkami In Focus

Introduction

Good afternoon everyone, and welcome to Stock Market Today. It's Ali Corman and Ken Shreve here with a look at today's session, Wednesday, October 23rd. Fears have resurfaced over spiking interest rates, with yields hitting their highest levels in a couple of months. Consequently, tech stocks have borne the brunt of the selling pressure today.

The NASDAQ composite was the hardest hit, down 1.6% by the session's close, while the S&P 500 fell by 0.9% and the Dow was down nearly 1%. Small caps were also affected, with the Russell 2000 declining by about 0.81%.

NASDAQ and S&P Analysis

Ken noted that the NASDAQ held above its 21-day moving average after today's decline, avoiding a distribution day despite a broad-based selling across many sectors. Similarly, the S&P 500’s trend remains intact, as it too closed above the 21-day line. The uptrend continues as both indexes reflect a resilient market structure.

Dow and Small Caps

The Dow closed right at its short-term support level at the 21-day line and, like the other major indexes, also managed to close off its lows. However, the Russell 2000 showed more vulnerability, dipping below the significant round number of 2200. It is facing a five-day losing streak as rising interest rates typically hurt smaller companies more significantly.

Rising Interest Rates

The 10-year Treasury yield also advanced today, closing above 4.2%, reaching levels not seen in several months. While the bond market remains oversold, market participants are currently assessing how rising interest rates may influence the Federal Reserve's plans regarding potential rate cuts expected in the future.

Sector Action

Underneath the market's surface, utilities (XLU) bucked the weakness, up 1%, due to the sector's appeal for yield in this environment. On the corporate earnings front, AT&T posted a notable gain of 4.6% following its earnings report, which, while not spectacular, was better than feared, and the stock offers a solid dividend yield of around 5%.

In the insurance sector, Ryan Specialty (RYAN) rebounded 2.2%, breaking above the 21-day line after several down days. The stock is eyeing an upcoming earnings report next week.

Alkemi Technology (ALKT) also stood out amidst the tech sector’s weakness, showing a fractional gain and exhibiting strong uptrend resilience and accumulation, making it worth watching closely.

Tesla Earnings Update

Earnings from Tesla after the close had a positive initial reaction, with shares rising by 7.5%. The company's performance showed promise, especially with its new Cybertruck ranked as the third top-selling EV in the U.S. for the quarter, potentially lifting bullish sentiment in the market.

Upcoming Discussions

We invite you to check out the article on investors.com for further details, and don’t miss our weekly podcast at 5 PM where Justin Nielsen will host John Kosar of Asbury Research to discuss ETF inflows and outflows in the context of current market trends. You can also catch our daily analyses on IBD Live and our YouTube channel.

Keywords

Interest rates, NASDAQ, S&P 500, AT&T, Ryan Specialty, Alkami Technology, 10-year Treasury yield, utilities, Tesla, earnings, stock market.

FAQ

Q1: Why did the NASDAQ drop today?
A1: The NASDAQ fell by 1.6%, primarily due to fears surrounding rising interest rates, affecting tech stocks disproportionately.

Q2: How are AT&T's earnings impacting its stock?
A2: AT&T reported earnings that were better than initially feared, leading to a 4.6% increase in its stock price, aided by its attractive dividend yield.

Q3: What impact do rising interest rates have on small caps?
A3: Rising interest rates tend to hurt small-cap stocks more severely, as these companies are often more sensitive to borrowing costs compared to larger firms.

Q4: What did Tesla's earnings reveal?
A4: Tesla's earnings report showed a positive reaction, with shares up 7.5%, and the Cybertruck emerged as the third top-selling EV in the U.S., which contributed to a bullish outlook.