Wall Street mixed as megacap tech stocks fall; banks gain

By Lisa Pauline Mattackal and Purvi Agarwal

(Reuters) -The Dow regained some lost ground on Wednesday although the S&P 500 and the Nasdaq stumbled, dragged lower by declines in megacap technology stocks, while the broader market gained from upbeat quarterly earnings from banks, notably Morgan Stanley.

Morgan Stanley rose 6.7%, joining peers such as JPMorgan Chase in reporting strong profits after a sharp increase in investment banking revenue.

First Horizon gained 3.3% and U.S. Bancorp rose 5% after reporting third-quarter results.

The Financials sector trended 0.7% higher, while the broader Banks index was up 1.1%. An index tracking regional banks rose 1.3%.

Gains on the benchmark index were kept in check by Communication Services, which fell 0.7%, weighed by Meta Platforms, which lost 1.5%.

Among other megacap stocks, Apple fell 1.4% after hitting a record high in the previous session, while Microsoft was off 1.3%.

The Dow Jones Industrial Average rose 133.14 points, or 0.31%, to 42,872.78, the S&P 500 lost 5.00 points, or 0.08%, to 5,810.69, and the Nasdaq Composite lost 71.98 points, or 0.39%, to 18,243.21.

The small-cap Russell 2000 index outperformed with a 0.83% gain.

"There has been a broadening out in terms of participation... in the small caps versus the large caps. That's a positive sign, some of it having to do with interest rates coming down and some relief on the balance sheet side for more highly levered smaller-cap companies," said Zachary Hill, head of portfolio management at Horizon Investments.

Most semiconductor companies traded higher, with heavyweight Nvidia up 0.5% after slumping nearly 5% in the previous session.

However, U.S.-listed shares of chip equipment-maker ASML Holding lost 5.3% after the company cut its 2025 financial forecast on Tuesday. Intel fell 3.3% after the Cybersecurity Association of China recommended initiating a review of the chipmaker's products sold in the country.

Declines in semiconductor and oil stocks dragged on Wall Street on Tuesday, as investors were assessing a mixed-bag of earnings. Still, the S&P 500 and the Dow were trading around record high levels.

"Generally speaking, bank earnings have been pretty well received by the market and that has been helpful for broad indices... you definitely need things other than tech to be working in order for that to continue," Hill said.

More corporate earnings are due through the week, along with key economic data including the retail sales and industrial production figures on Thursday, all of which are expected to shed light on consumer health and the growth outlook for the world's largest economy.

Bets on a 25-basis-point rate cut at the central bank's November meeting have risen above 90%, according to CME's FedWatch.

United Airlines rose 8% after it forecast better-than-expected fourth-quarter profit and announced a $1.5-billion share buyback program on Tuesday.

J.B. Hunt climbed 6.2% after beating third-quarter profit estimates on Tuesday after the bell.

Advancing issues outnumbered decliners by a 3.37-to-1 ratio on the NYSE, and by a 2.14-to-1 ratio on the Nasdaq.

The S&P 500 posted 25 new 52-week highs and no new lows, while the Nasdaq Composite recorded 55 new highs and 20 new lows.

(Reporting by Lisa Mattackal and Purvi Agarwal in Bengaluru; Editing by Pooja Desai)