U.S. stocks were little changed on Wednesday, after coming off a sharp rally in the previous session, as traders pored over more corporate earnings.
The Dow Jones Industrial Average dipped 63 points, or 0.2%. The S&P 500 dipped 0.04% and the Nasdaq Composite gained 0.47%.
Some investors have been encouraged by the recent trading action, believing it is signaling that the bear market has bottomed. NYSE stocks achieved a widely followed “90% up day” on Tuesday with more than 90% of stocks listed on the exchange advancing and accounting for more than 90% of the volume.
“We view this bullish breadth day as a sign that the summer rebound for U.S. equities can continue,” wrote Stephen Suttmeier, technical research strategist for Bank of America, in a note Wednesday.
The Dow rallied more than 700 points during Tuesday’s session, with the S&P 500 and Nasdaq soaring 2.8% and 3.1%, respectively. The three benchmarks also closed above their respective 50-day moving averages for the first time since April.
Investors pointed to a Bank of America survey that suggested deteriorating sentiment could potentially set up a buying opportunity in the market. Meanwhile, the U.S. dollar, which recently surged to a 20-year high against the euro, softened, giving the rally more steam.
Still, some market participants were skeptical of the bounce.
“Despite Tuesday’s more positive trading session, we don’t expect a sustained improvement in market sentiment until investors get greater clarity on the outlook for the economy, central bank policy, and political risks,” UBS’ Mark Haefele wrote in a Wednesday note.
Netflix climbed 1% after saying it lost only 970,000 subscribers in the second quarter, less than the 2 million it had previously projected. The streaming giant’s earnings per share also came in above analyst expectations.
Tesla and United Airlines are slated to post their latest quarterly results after the close.
About 12% of S&P 500 companies have reported earnings thus far. Of those companies, 68% have beaten analyst expectations, according to FactSet. Investors had been awaiting this earnings season as they search for clues on how companies are faring with inflation at levels not seen in 40 years.
On the economic front, a report from the Mortgage Bankers Association pointed to more pain for U.S. consumers as they deal with higher prices and interest rates. Mortgage demand declined more than 6% last week compared with the prior week, dropping to its lowest level in 22 years.
