Stocks diverge as tech stocks dip

February 09, 2023: Stock markets wavered on Wednesday, with tech shares falling and investors digesting President Joe Biden's calls for tax hikes amid lingering worries over a worsening corporate profit outlook.

In his annual State of the Union speech on Tuesday, Biden urged unity and touted a blue-collar economic resurgence, with proposals including a new minimum tax on billionaires.

But US stocks spent the entire session in the red, with the S&P 500 closing down more than one percent.

Analysts pointed to a weakening corporate earnings outlook due in part to worries over central bank actions.

"There's a fear that they're going to keep rates too high for too long," Jack Ablin of Cresset Capital said of Wednesday's downcast session.

Shares of Google's parent company Alphabet sank almost eight percent after the company presented some of the features of its Bard chatbot amid a battle over artificial intelligence with Microsoft.

Shares of video game maker Activision Blizzard also fell after UK regulators said Microsoft's $69 billion takeover bid could harm competition and consumer choice.

European markets were given a boost by bumper annual profits at French energy major Total Energies and Norwegian peer Equinor, mirroring UK rivals BP and Shell.

But the Paris CAC 40 index fell at the end of the day following disappointing earnings for banking giant Societe Generale while the Frankfurt DAX finished higher. London's FTSE 100 hit a record 7,934.30 points earlier in the day but later pared down some of the gains.

In Asia, Tokyo, Hong Kong and Shanghai closed lower.

But markets remain anxious over the Fed's plans.

AJ Bell investment director Russ Mould said remarks from Fed Chair Jerome Powell on Tuesday "had just the soothing message the market was looking for."

A run of key US data in recent months has indicated a series of bumper interest rate hikes last year is beginning to pay off, fueling hopes that the Fed could pause its tightening cycle and even lower borrowing costs at the end of the year.

But a forecast-busting jobs report on Friday showing half a million new jobs created in January -- stoked speculation that more increases were on the way.

Powell's remarks were similar to what he said last Wednesday, after the bank's latest policy meeting, which sparked an equities rally.

Fawad Razaqzada, the analyst at City Index and Forex.com, said Powell's latest speech was "deemed neutral overall".

"Powell acknowledged that the disinflationary process is underway, but also suggested that interest rates may have to be pushed even higher if jobs data continues to show upside surprises," Razaqzada said.

Key figures around 2140 GMT

New York - Dow: DOWN 0.6% at 33,949.01 (close)

New York - S&P 500: DOWN 1.1% at 4,117.86 (close)

New York - Nasdaq: DOWN 1.7% at 11,910.52 (close)

London - FTSE 100: UP 0.3% at 7,885.17 (closed)

Frankfurt - DAX: UP 0.6% at 15,412.05 (closed)

Paris - CAC 40: DOWN 0.2% at 7,119.83 (closed)

EURO STOXX 50: FLAT at 4,209.15 (closed)

Tokyo - Nikkei 225: DOWN 0.3% at 27,606.46 (close)

Hong Kong - Hang Seng Index: DOWN 0.1% at 21,283.52 (close)

Shanghai - Composite: DOWN 0.5% at 3,232.11 (close)

Euro/dollar: DOWN at $1.0716 from $1.0726 on Tuesday

Pound/dollar: UP at $1.2071 from $1.2048

Euro/pound: DOWN at 88.75 pence from 89.04 pence

Dollar/yen: UP at 131.42 yen from 131.07 yen

Brent North Sea crude: UP 1.7% at $85.09 per barrel

West Texas Intermediate: UP 1.7% at $78.47 per barrel

AFP/APP