Wall Street was buoyed by mega-cap stocks on Wednesday as corporate news put pressure on McDonald's and Coca-Cola, while U.S. Treasury yields rose and investors grew uncertain about the prospect of strong interest rate cuts by the Federal Reserve. led the decline and fell.
The Dow Jones Industrial Average fell more than 600 points, dropping 409 points, or 1%, to end at 42,514.95. It was the worst day for the blue-chip index in more than a month.
The S&P 500 fell 0.9% and the Nasdaq fell 1.6%. The Dow, benchmark, and S&P 500 posted their third straight day of declines.
The yield on the benchmark 10-year U.S. Treasury note hit a three-month high as investors reassess the prospects for Fed rate cuts in coming months on the back of strong economic data and the upcoming presidential election.
“More than anything, what's driving things is rising interest rates,” said Thomas Martin, senior portfolio manager at Globalt Investments, adding that markets are likely to become more nervous as the election gets closer. added.
Rate-sensitive megacaps took a hit, with Nvidia down 2.8%, Apple down 2.2% and information technology stocks down 1.7%, dragging down the tech-heavy Nasdaq.
McDonald's fell 5% after one person died and many others were sickened by an E. coli infection linked to its Quarter Pounder hamburger.
Coca-Cola fell 2.1% after the company reiterated its full-year profit growth forecast, despite expecting higher sales.
“There has to be a balance with the fact that the U.S. stock market is expensive on a valuation basis, so there could be some profit-taking,” said Michael O'Rourke, chief market strategist at Jones Trading.
US markets are nearing record highs, but a combination of earnings, changes in the monetary policy outlook, and the upcoming presidential election could test the sustainability of the recent rally and cause some market volatility. Yes, analysts said.
Richmond Fed President Thomas Barkin said the central bank's efforts to bring inflation back to its 2% target may take longer than expected and rate cuts may be limited.
Boeing fell 1.8%, reporting a $6 billion quarterly loss due to the massive strike.
Factory workers at the troubled aircraft maker are scheduled to vote later that day on a new contract that could end more than five weeks of deadlock.
Meanwhile, Starbucks pared significant premarket losses and rose 0.9% after suspending its full-year forecast on Tuesday.
Semiconductor company Texas Instruments rose 4% after its third-quarter profit beat expectations, while AT&T rose 3.8% after gaining more wireless subscribers than expected in the third quarter.
