Stock indexes closed lower on Wednesday, with the S&P 500 down -0.53%, Dow Jones down -0.71%, and Nasdaq 100 down -0.99%. Chipmakers sold off after Texas Instruments’ weak forecast, while Netflix dropped over -9% on lower Q3 EPS. However, Intuitive Surgical and Capital One Financial posted strong earnings, boosting stocks. The broader market was under pressure throughout the session.
The Trump administration is considering restrictions on exports to China, impacting trade talks. US MBA mortgage applications fell -0.3%, with the 30-year fixed rate mortgage at 6.37%. The ongoing government shutdown delays key economic reports, potentially impacting jobless claims. Corporate earnings are in focus, with positive results supporting stocks.
Earnings season continues, with 85% of S&P 500 companies beating forecasts. Q3 profits are expected to rise by +7.2% y/y, the smallest increase in two years. The markets predict a -25 bp rate cut at the next FOMC meeting. Overseas markets closed lower, with the Euro Stoxx 50 down -0.84% and China’s Shanghai Composite down -0.07%.
Interest rates saw modest gains on Wednesday, with T-notes up +1.5 ticks. T-notes have ongoing support due to the government shutdown. European bond yields were mixed, with the German bund yield up +1.1 bp. UK CPI rose +3.8% y/y, while core CPI eased slightly. Swaps indicate a 2% chance of a rate cut by the ECB.
Stocks like Texas Instruments, ON Semiconductor, and Netflix led losses, while Intuitive Surgical and Capital One Financial gained. Cryptocurrency-exposed stocks fell, and Lennox International cut its full-year EPS forecast. Energy producers rallied as WTI crude oil rose more than +2%, with Halliburton and Marathon Petroleum up more than +3%.
Amphenol, Hilton Worldwide Holdings, and Avadel Pharmaceuticals were among the gainers. Earnings reports for various companies are anticipated on October 23. The author of the article did not hold positions in any mentioned securities. The views expressed are solely for informational purposes.
Read more at Nasdaq: Stocks Retreat on Chipmaker Weakness and Renewed China Tensions