Treasury rates increased once again on Wednesday, as investors evaluated the most recent round of quarterly company results and projections. As a result, U.S. equities finished the day considerably down, with the S&P 500 and Nasdaq losing more than 1% apiece.
An increase in Middle East tensions fueled aversion to risk. The price of safe-haven gold reached its highest point in almost two months. The fear indicator used by Wall Street, the Cboe Volatility index, spiked.
An increase in U.S. single-family homebuilding data in September gave rise to somewhat higher yields, bolstering the belief that the Federal Reserve will maintain higher interest rates for an extended period of time.
According to Rick Meckler, partner at Cherry Lane Investments, a family investment office in New Vernon, New Jersey, “we’re in a period of sector rotation, and people are trying to figure out in this new environment – in a full reset of rates across the curve – what are the stocks that are going to suffer and what are the stocks that will continue to do well.”
“Obviously, companies that are highly leveraged have difficulties in this kind of a market.”
In terms of results, shares of Procter & Gamble increased 2.6% as a result of the company’s quarterly revenues exceeding market estimates, while shares of United Airlines Holdings fell 9.7% as a result of the company’s prediction of a lower fourth-quarter profit because of increased expenditures. 5.6% was the decline in the S&P 500 passenger airlines index.
The S&P 500 sank 58.6 points, or 1.34%, to 4,314.6, the Nasdaq Composite slid 219.45 points, or 1.62%, to 13,314.30, and the Dow Jones Industrial Average fell 332.57 points, or 0.98%, to 33,665.08.
Concerns regarding fallout from the Israel-Hamas conflict, which started on October 7 with a Hamas attack on Israeli troops and civilians, have been raised by investors. During a brief visit to Gaza on Wednesday, U.S. President Joe Biden reaffirmed his support for Israel and stated that a missile misfire by terrorists appeared to be the cause of a tragic explosion at a hospital there.
In other earnings-related news, sluggish dealmaking hurt Morgan Stanley’s third-quarter profit. Stocks saw a 6.8% decline for the day.
Following the bell, Netflix had a 12% increase in shares and Tesla saw a 2% increase following the release of their quarterly reports. During the main session, Netflix concluded the day down 2.7% and Tesla down 4.8%.
The third-quarter U.S. earnings season is about to get underway, so more reports are anticipated in the days ahead.
10.48 billion shares were traded on US exchanges throughout the whole session, which is lower than the 10.45 billion average for the previous 20 trading days.
On the NYSE, declining issues outnumbered rising ones by a ratio of 4.67 to 1; on Nasdaq, the ratio was 3.33 to 1, favouring decliners.
The Nasdaq Composite achieved 25 new highs and 252 new lows, while the S&P 500 recorded 12 new 52-week highs and 25 new lows.