TLDR:
- Markets declined significantly with Nasdaq leading losses, dropping 1.6%
- Treasury yields hit highest levels since July at 4.24%
- McDonald’s stock dropped 5% due to E. coli outbreak linked to Quarter Pounders
- Boeing reported $6B quarterly loss ahead of crucial union vote
- Tesla earnings awaited amid questions about cheaper EVs and AI strategy
Stock markets tumbled on Wednesday as rising bond yields and uncertainty about interest rate cuts weighed heavily on investor sentiment. The tech-heavy Nasdaq Composite led the decline, falling approximately 1.6%, while the Dow Jones Industrial Average dropped nearly 1% and the S&P 500 slid more than 0.9%.
Treasury yields continued their upward trajectory, with the 10-year yield reaching 4.24%, levels not seen since July. This surge in yields reflects growing doubts among investors about how quickly the Federal Reserve might implement interest rate cuts in the coming year.
Major technology stocks faced significant pressure throughout the trading session. Meta saw its shares decline more than 3%, while both Amazon and Nvidia experienced drops exceeding 2.5%. This widespread tech selloff came as investors awaited Tesla’s earnings report, scheduled for release after market close.
The day brought particularly challenging news for McDonald’s shareholders, as the fast-food giant’s stock fell more than 5% following confirmation that its Quarter Pounder burgers were linked to an E. coli outbreak in several states. The company has responded by removing quarter pounders and onions from approximately 2,700 U.S. locations, representing about one-fifth of its domestic restaurants.
Boeing added to the market’s woes by reporting a substantial quarterly loss of $6.17 billion, bringing its total losses for 2024 to nearly $8 billion. The aircraft manufacturer’s challenges coincided with an important union vote that could determine the fate of an ongoing worker strike.
The housing market showed continued signs of cooling, with existing home sales dropping to their lowest level in 14 years. September’s sales fell 1.0% from August to a seasonally adjusted annual rate of 3.84 million units, marking the lowest rate since October 2010.
Despite earlier optimism about potential rate cuts, the Federal Reserve’s latest Beige Book indicated a labor market that remains relatively stable. The report noted low worker turnover and limited layoffs across many districts, though hiring has primarily focused on replacement rather than growth.
In the energy sector, oil prices declined more than 1% as U.S. inventories showed unexpected growth. West Texas Intermediate crude traded above $70 per barrel, while Brent crude hovered near $75, with traders closely monitoring developments in the Middle East situation.
Trump Media & Technology Group provided a notable exception to the day’s downward trend, with its stock (DJT) rising more than 4%. This movement extended the previous day’s gains, pushing the share price to its highest level since July.
AT&T offered some positive news, reporting better-than-expected third-quarter earnings driven by stronger wireless subscriber growth. The telecommunications company’s stock rose 3% following the announcement.
Coca-Cola’s quarterly results presented a mixed picture, with the beverage giant reporting weaker revenue compared to the previous year, though still managing to exceed Wall Street’s expectations for both revenue and earnings per share.
The day’s market activity reflected growing concerns about the sustainability of recent stock market gains, particularly in the technology sector. With Tesla’s earnings report looming, investors appeared increasingly cautious about the near-term outlook for growth stocks.
Trading volume remained robust throughout the session, indicating broad participation in the market’s downward movement. The CBOE Volatility Index, often referred to as the market’s fear gauge, showed increased anxiety among investors.
Interest rate volatility reached its highest level since December 2023, as measured by the MOVE Index, highlighting the uncertainty surrounding the Federal Reserve’s future monetary policy decisions.
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