S&P 500 is flat despite strong earnings

The S&P 500 was steady on Wednesday despite several strong earnings reports.

The Dow Jones Industrial Average fell about 50 points, despite a 4% jump in Procter & Gamble's stock. The S&P 500 was flat. The technology-focused Nasdaq Composite fell 0.1%.

Stocks were little-changed despite a slew of strong corporate earnings results. Bank of America beat Wall Street estimates as it released pandemic-related loan loss reserves. Shares rebounded 2%, a day after sliding 3.4%. Other bank stocks, however, were in the red.

Morgan Stanley saw its stock rise 2% after the bank's fourth-quarter profit topped estimates. It also experienced a 13% jump in equities trading revenue.

Wednesday's market moves are "being fueled by the earnings reports this morning," said Matt Maley, chief market strategist at Miller Tabak + Co.. "We finally got some positive news from the bank stocks with [Bank of America's] better numbers."

Procter & Gamble shares popped 4% after the consumer giant reported fiscal second-quarter earnings and revenue that topped Wall Street's expectations. The company raised its outlook for sales growth.

"Higher inflation has raised concerns about input costs for many companies. Since [Procter & Gamble's] margins were fine, this has relieved some of those concerns," added Maley.

UnitedHealth also rose 1.4% after beating on the top and bottom lines of its quarterly results.

Earnings season is picking up on Wall Street and so far the majority of companies have surpassed analyst expectations. Of the 44 S&P 500 companies that have reported quarterly results, nearly 73% have topped Wall Street's expectations, according to FactSet.

On the negative side, home builders also were broadly lower following after KeyBanc downgraded the group on concerns over looming interest rate hikes that will drive up borrowing costs. KB Home lost 1.7%, Lennar fell 1.6% and D.R. Horton fell 1.7%.

Shares of Sony tumbled 3.8% the day after Microsoft said it is buying video game publisher Activision Blizzard for nearly $69 billion. Sony's PlayStation competes with Microsoft's Xbox consoles. The drop in Sony's stock comes after shares slid 7.2% on Tuesday.

Government bond yields fell slightly on Wednesday with the 2-year note falling to 1.016% and the benchmark 10-year Treasury near 1.85%, after hitting 1.9% earlier in the session. That was the bond rate's highest level since December 2019.

Surging bond yields spurred the sell-off in stocks on Tuesday. The 2-year Treasury rate — which reflect short-term interest rate expectations — topped 1% for the first time in two years.

On Tuesday, the Dow Jones Industrial Average lost more than 540 points, dragged down by a 7% drop in Goldman Sachs. The Wall Street bank missed analysts' expectations for earnings as operating expenses surged 23%. Its shares recovered slightly on Wednesday.

The S&P 500 declined 1.8% on Tuesday. The Nasdaq Composite, full of interest rate sensitive technology stocks, was the relative underperformer, dipping 2.6%. The Nasdaq closed at its lowest level in three months as investors feared how quickly the Federal Reserve will hike interest rates.

The move, which comes after a market holiday in the U.S. Monday, indicated that investors are preparing for the possibility of more aggressive tightening by the Federal Reserve.