Wall St falls more than 1%; yields rise, investors assess earnings
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[October 19, 2023] By
Caroline Valetkevitch
NEW YORK (Reuters) - U.S. stocks ended sharply lower on Wednesday, with
the S&P 500 and Nasdaq falling more than 1% each, as Treasury yields
rose again and investors assessed the latest batch of quarterly
corporate results and forecasts.
Mounting tensions in the Middle East stoked risk aversion. Safe-haven
gold hit its highest level in more than two months. The Cboe Volatility
index, Wall Street's fear gauge, jumped.
Yields edged higher after data showing U.S. single-family homebuilding
rebounded in September, supporting the view that the Federal Reserve
will keep interest rates higher for longer.
"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 continue to do well and what are
the stocks that are going to suffer," said Rick Meckler, partner at
Cherry Lane Investments, a family investment office in New Vernon, New
Jersey.
"Obviously, companies that are highly leveraged have difficulties in
this kind of a market."
Higher yields from risk-free U.S. Treasuries dull the appeal of stocks.
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On the earnings front, Procter & Gamble shares gained 2.6% after its
quarterly sales topped market expectations, while United Airlines
Holdings shares plunged 9.7% after the company forecast weaker
fourth-quarter profit due to higher costs. The S&P 500 passenger
airlines index dropped 5.6%.
The Dow Jones Industrial Average fell 332.57 points, or 0.98%, to
33,665.08, the S&P 500 lost 58.6 points, or 1.34%, to 4,314.6 and the
Nasdaq Composite dropped 219.45 points, or 1.62%, to 13,314.30.
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Traders work on the floor of the New York Stock Exchange (NYSE) in
New York City, U.S., September 26, 2023. REUTERS/Brendan McDermid/File
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Investors have been worried about repercussions from the
Israel-Hamas conflict that began Oct. 7 with a Hamas attack on
Israeli civilians and soldiers. U.S. President Joe Biden, during a
lightning visit on Wednesday, pledged solidarity with Israel and
said a deadly blast at a Gaza hospital seemed to have been caused by
a rocket misfired by militants.
Also in earnings news, Morgan Stanley's third-quarter profit showed
a hit from lethargic dealmaking. Shares ended the day down 6.8%.
After the closing bell, shares of Tesla were up about 2% and Netflix
jumped about 12% after the companies reported quarterly results.
Tesla ended the regular session down 4.8% and Netflix ended the
session down 2.7%.
More results are expected in the coming days as third-quarter U.S.
earnings season kicks into high gear.
Volume on U.S. exchanges was 10.48 billion shares, compared with the
10.45 billion average for the full session over the last 20 trading
days.
Declining issues outnumbered advancing ones on the NYSE by a
4.67-to-1 ratio; on Nasdaq, a 3.33-to-1 ratio favored decliners.
The S&P 500 posted 12 new 52-week highs and 25 new lows; the Nasdaq
Composite recorded 25 new highs and 252 new lows.
(Additional reporting by Ankika Biswas and Shashwat Chauhan in
Bengaluru; additional reporting by Sruthi Shankar; editing by Arun
Koyyur, Vinay Dwivedi, Nick Zieminski and David Gregorio)
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