The stock market saw Tesla shares surge, propelling the Nasdaq Composite to its third consecutive day of gains. While the Nasdaq rose by 0.1%, the S&P 500 experienced a modest increase of less than 0.1%, while the Dow Jones Industrial Average dipped by 0.1%.
After enduring its worst week in over a year, U.S. stocks rebounded in recent sessions, buoyed by positive earnings reports from companies like Visa and Texas Instruments. However, some of the earlier enthusiasm waned on Wednesday as investors began scrutinizing earnings releases from members of the technology giant group dubbed the Magnificent Seven.
Bill Merz, head of capital markets research at U.S. Bank Wealth Management, noted that the earnings landscape has remained consistent with the broader narrative of robust growth.
Beneath the surface, significant movements unfolded in the market. Despite reporting a disappointing quarter on Tuesday, Tesla shares soared by 12% following remarks by CEO Elon Musk regarding the production of more affordable electric cars. Additionally, Texas Instruments saw its shares surge by 5.6%, providing a lift to semiconductor stocks as well.
Investors closely monitored a record $70 billion auction of 5-year notes, with demand ultimately aligning with expectations, helping to pull yields back from their earlier highs during the session.
Concerns about the impact of substantial new bond supply on the market have been lingering, with investors keeping a close eye on a series of large auctions. Later in the week, a sale of 7-year notes is scheduled, along with the issuance of around $386 billion in bonds in May.
Volatility in bond yields has been a key driver of stock market turbulence, with stocks relinquishing some of their early gains during midday trading. The yield on the 10-year Treasury note climbed to 4.652%, up from 4.597% in the previous session, as bond prices declined.
Zhiwei Ren, a portfolio manager at Penn Mutual Asset Management, commented that as long as rates remain elevated, the equity market may encounter some pressure.