NEW YORK, April 25 ― The Nasdaq closed lower yesterday, underperforming the S&P 500 and the Dow, with pressure from high-profile megacaps as investors awaited results from companies including Microsoft while Tesla shares fell on concerns about its spending plans.

Tesla Inc finished down 1.5 per cent after the automaker raised its 2023 capital expenditure forecast to ramp up output, making it the second biggest drag on the benchmark S&P 500 behind Microsoft Corp.

Shares in Microsoft, up more than 17 per cent so far this year, were under pressure yesterday as investors appeared anxious about its results, due out today. Another heavyweight laggard was Amazon.com Inc, which is on deck to report this week along with Alphabet Inc, and Meta Platforms Inc.

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A rally in these stocks has supported Wall Street this year, so investors are worried about whether the gains can continue given the gloomy economic outlook.

“People are a little tentative that the outperformance may not continue in earnings season, which thus far has been quite a bit better than expected. Granted the bar was low,” said Randy Frederick, managing director, trading and derivatives at Charles Schwab in Austin, Texas.

Frederick also pointed to anxiety about upcoming economic data such as first-quarter growth and inflation readings.

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The Dow Jones Industrial Average rose 66.44 points, or 0.2 per cent, to 33,875.4 while the S&P 500 gained 3.52 points, or 0.09 per cent, at 4,137.04. The Nasdaq Composite dropped 35.25 points, or 0.29 per cent, to 12,037.20.

Among the S&P 500's 11 major sectors, energy was the strongest, rising 1.5 per cent, while technology was the weakest, down 0.4 per cent.

Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, said the Philadelphia semiconductor index, which closed down 0.5 per cent, was likely underperforming due to increasing global tensions with China.

US stocks have largely held steady through the start of the earnings season on stronger-than-expected results from big banks, allaying concerns about a contagion from the regional banking crisis in March.

Of the 90 S&P 500 companies that have reported first-quarter results so far, nearly 77 per cent have topped analysts' estimates compared with the long-term average beat rate of 66 per cent, as per Refinitiv IBES data.

Early readings of first-quarter US GDP, personal consumer expenditure index (PCE) for March, and April consumer confidence are among the data scheduled for release this week.

Mixed data last week cemented bets of a 25-basis-point rate hike by the Federal Reserve in May, with money market traders pricing in a 92 per cent chance of such a move, according to CME Group's Fedwatch tool. Fed policymakers said in the past week that the central bank has more work to do to bring down inflation.

US Treasury yields eased following recent signs of slowing inflation and economic activity, though investors appeared increasingly concerned about a government spending stand-off and the potential for the United States to hit its debt ceiling sooner than expected.

US House of Representatives Speaker Kevin McCarthy said the House would vote on his spending and debt bill this week.

Amazon fell 0.7 per cent while Meta pared earlier losses to close off just 0.04 per cent. Google's parent Alphabet managed a 0.5 per cent gain. AT&T Inc, which reported disappointing results on Thursday, deepened last week's losses with a 3.8 per cent drop yesterday.

Also dragging on the S&P 500 was air conditioner maker Carrier Global Corp, which closed down 7.3 per cent, after reports, citing unidentified sources, said it was in advanced talks to acquire German industrial manufacturer Viessmann for more than US$12 billion (RM53 billion) including debt.

In the penny-stock department, shares in once-popular home goods retailer Bed Bath & Beyond tumbled 35.7 per cent to 19 cents after it declared bankruptcy on Sunday. Retail rivals including Target Corp and Walmart Inc gained 1.1 per cent and 0.7 per cent respectively yesterday.

After closing up 12.2 per cent, First Republic Bank shares lost ground in after-the-bell trading following the closely watched regional bank's quarterly report, which showed its deposits fell 41 per cent in the first quarter.

The stock was last down almost 87 per cent year-to-date as the US banking crisis sent investors to the exits.

Advancing issues outnumbered decliners on the NYSE by a 1.32-to-1 ratio; on Nasdaq, a 1.41-to-1 ratio favoured decliners.

The S&P 500 posted 21 new 52-week highs and two new lows; the Nasdaq Composite recorded 64 new highs and 201 new lows.

On US exchanges 9.54 billion shares changed hands compared with the 10.30 billion average for the last 20 sessions. ― Reuters