U.S. stocks fell on Wednesday, breaking the record-breaking rally that Wall Street has been experiencing. The S&P 500 saw a 0.9% decrease, marking its first three-day losing streak since early September. This pullback followed a six-week winning streak for the index, which had reached an all-time high on Friday. The Dow Jones Industrial Average dropped by 1% and the Nasdaq composite tumbled 1.6%, with technology stocks like Nvidia being among the heaviest weights on the market. Rising Treasury yields have put pressure on stocks, making investors less willing to pay high prices for stocks that may already be overvalued.
The bond market has been impacting stock investors, with the value of the U.S. dollar rising against other currencies. McDonald’s contributed to the market decline, dropping 5.1% after an E. coli outbreak linked to its Quarter Pounder burgers affected at least 49 people in 10 states. The Centers for Disease Control and Prevention is investigating the outbreak to determine the contaminated ingredient. Coca-Cola also fell despite reporting stronger profits and revenue for the quarter, as the company’s shipment volume did not meet expectations. Boeing faced a 1.8% decline amid a substantial loss in the latest quarter and a strike by factory workers, contributing to a nearly 40% decrease in the company’s stock value this year.
Big Tech stocks, which have been criticized for their high prices, were among the market’s most impactful losses. Nvidia and Apple were two of the heaviest weights on the S&P 500, with Nvidia dropping by 2.8% and Apple falling by 2.2%. However, AT&T rose by 4.6% after reporting stronger profits than expected for the quarter. Texas Instruments also climbed by 4% after reporting stronger profit and revenue, with CEO Haviv Ilan noting growth in all end markets except for industrial users. Northern Trust rallied by 7% after topping analysts’ estimates for profit and revenue in the latest quarter.
Overall, the S&P 500 fell by 53.78 points, the Dow dropped by 409.94 points, and the Nasdaq composite fell by 296.47 points. In the bond market, the yield on the 10-year Treasury rose to 4.23%, reflecting a stronger-than-expected U.S. economy. Traders are now expecting the Federal Reserve to cut its main interest rate by half a percentage point more by the end of the year, compared to previous expectations. In international markets, Japan’s Nikkei 225 declined by 0.8%, while Chinese markets rose after the central bank cut its Loan Prime Rates. European markets were modestly lower amidst the market fluctuations.
In conclusion, the recent decline in U.S. stocks reflects a shift in momentum after a period of record-breaking gains. Rising Treasury yields and concerns about overvalued stocks, particularly in the tech sector, have contributed to the market pullback. Despite some companies reporting stronger profits, overall market sentiment remains cautious. Traders are closely watching economic indicators and the Federal Reserve’s actions, with expectations for further interest rate cuts. International markets are also experiencing fluctuations, reflecting the interconnected nature of the global economy. Investors will continue to monitor developments in the bond market and corporate earnings reports for insights into future market trends.
