NEW YORK: US stocks ended sharply lower on Wednesday (Oct 18), 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.
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.
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 US 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 US Treasuries dull the appeal of stocks.
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%.
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 US earnings season kicks into high gear. – Reuters