Rally on Wall Street evaporates, Dow turns negative as traders weigh rising rates

Stocks were lower Thursday, as traders assessed rising rates and Federal Reserve Chairman Jerome Powell was set to give a speech.

The Dow Jones Industrial Average shed about 10 points. The S&P 500 eased 0.4%, and the Nasdaq Composite dipped 0.8%. All three major averages were positive earlier in the session.

Powell is set to speak at 1 p.m. ET during the International Monetary Fund Debate on the Global Economy. The discussion is moderated by CNBC's Sara Eisen.

Treasury yields jumped ahead of Powell's speech, with the benchmark 10-year rate above 2.94%, near its highest level since December 2018.

Investors also pored over the latest quarterly reports, which included stronger-than-expected numbers from Tesla.

"I'm cautiously optimistic that earnings will keep beating, with a couple of outliers," Jeff Kilburg, chief investment officer, at Sanctuary Wealth, told CNBC.

"'Boring' names – American staple names that we forgot about – are doing better than expected," he continued, citing IBM as an example. "It's a big divergence from sentiment, especially with the 10-year [Treasury yield] nearly doubling. The shift from growth to value is really hitting its stride."

Tesla rose about 6% after better-than-expected earnings. Those numbers were propelled in part by strong car deliveries in the quarter. Several analysts lauded Tesla after the release, with one calling it a "core holding."

United added roughly 10% after the airline forecasted a profit in 2022. CEO Scott Kirby told CNBC on Wednesday he'd never seen "such a hockey stick increase of demand," referring to business travel and leisure bookings.

More than 17% of S&P 500 companies have reported earnings through Thursday's open, with nearly 81% of those names beating analyst expectations, according to FactSet.

On the downside, Warner Bros. Discovery retreated 8.3% after news of the company shutting down CNN+.

Despite market expectations for a series of aggressive interest rate increases, Fed officials in recent days have talked down making any dramatic moves.

Regional presidents Mary Daly of San Francisco, Charles Evans of Chicago and Raphael Bostic of Atlanta all have said that while they see the need to hike rates to tame inflation, they don't want to do anything that would halt the expansion. Daly did concede that tighter policy could trigger a mild recession but she said that's not her most likely case.

St. Louis Fed President James Bullard has been the outlier, saying earlier in the week that he's open to a 0.75 percentage point increase at the May meeting to help temper inflation running at a more than 40-year high.

Stocks are coming off a mixed session Wednesday. The Dow posted solid gains — boosted by strong earnings from Procter & Gamble — while the technology-heavy Nasdaq Composite was dragged down 1% by Netflix's post-report plunge.

"It continues to be a pretty bifurcated market," said Dave Grecsek, managing director in investment strategy and research at wealth management firm Aspiriant. "Some of the more defensive, value-style companies are enjoying good returns. The flipside is some of those more growth-style tech names are going to be struggling."

In economic data, initial jobless claims came in slightly higher than expected at 184,000 for the week ending April 16, showing a decline of 2,000. Dow Jones analysts estimated 182,000 first-time claims.