U.S. stock indexes slipped on Wednesday due to sinking technology stocks, with the S&P 500 on track for a fourth straight loss. The Dow Jones Industrial Average was down 0.1% and the Nasdaq composite dropped 0.9%. Tech stocks slumped after ASML reported weaker orders than expected, leading to declines in other companies like Nvidia and Broadcom. Despite this, some big companies, such as United Airlines, reported stronger-than-expected profits, boosting their stock prices.
The losses in the stock market occurred despite easing pressure from the bond market, with oil price tumbles lessening worries about inflation. As a result, Treasury yields decreased, with the 10-year Treasury yield falling to 4.58% from 4.67% and the two-year yield dropping to 4.92% from 4.99%. Traders had given up hopes for immediate interest rate cuts by the Federal Reserve after recent gains, anticipating only one or two cuts this year, a significant decrease from earlier forecasts.
High interest rates negatively impact investments and raise the risk of a recession, prompting concerns from Fed officials with persistent inflation rates. With fewer expected interest rate cuts, companies will need to deliver strong profits to justify their stock price gains. Meanwhile, Travelers and J.B. Hunt Transport Services reported weaker-than-expected results, causing their stock prices to fall. On the positive side, Omnicom Group saw a 1.2% increase in its stock price after reporting better-than-expected profits for the quarter.
The stock of Donald Trump’s social media company experienced sharp swings in value, jumping 15.4% after two consecutive losses. Experts attribute this volatility to public sentiment surrounding the former president rather than the company’s business prospects. In international markets, London’s FTSE 100 rose 0.4% following a report showing a decrease in U.K. inflation, potentially leading to interest rate cuts. Other European indexes saw modest gains, while Asian markets were mixed with Japan’s Nikkei 225 falling 1.3% and Shanghai stocks rising 2.1%.
Overall, market sentiment remains uncertain as traders await corporate news to determine future market directions. With expectations for interest rate cuts dwindling, companies must demonstrate strong profits to maintain their stock price momentum. The technology sector faced challenges due to weaker-than-expected orders, offsetting positive earnings reports from some major companies. Bond market movements and inflation worries continue to influence market actions, adding to the overall volatility seen in stock indexes.
