Nasdaq, S&P 500 slip from record highs as yields and oil rebound
The Nasdaq Composite and the S&P 500 eased from record highs on Wednesday as Treasury yields and oil prices rebounded, leaving investors cautious while they awaited minutes from the Federal Reserve's September meeting. At 9:43 a.m. ET, the Dow Jones Industrial Average had fallen 472.21 points, or 0.92 per cent, to 51,049.07, the S&P 500 had lost 44.80 points, or 0.56 per cent, to 7,775.04, and the Nasdaq Composite had lost 235.16 points, or 0.85 per cent, to 27,364.73.
Brent crude moved back above $100 a barrel as Middle East supply concerns persisted, while the yield on 30-year Treasury bonds reached its highest level since 2002, last at 5.72 per cent, ahead of the release later in the day of minutes from the Fed's September policy meeting, when policymakers raised interest rates to combat inflation. "We're seeing a little bit of profit-taking today. The market is very focused on the Fed minutes, but ultimately it's where oil prices and yields move that will determine the market's direction today," said Peter Cardillo, chief market economist at Spartan Capital Securities. Traders widely expect the Fed to hold rates steady at its October meeting, though a December increase remains on the cards, according to the CME FedWatch Tool.
Chip stocks were among the leading decliners. Memory chip firm Micron Technology dropped 2.3 per cent, chip giant Nvidia eased 0.7 per cent and the broader Philadelphia chip index fell 2.3 per cent. Elon Musk's SpaceX lost 1.7 per cent after a Financial Times report that the company was seeking $40 billion in financing to fund purchases of Nvidia chips. Eight of the 11 S&P 500 sectors traded lower, with materials and industrials leading the losses, while energy and healthcare were each up 0.6 per cent. Declining issues outnumbered advancers by 3.74-to-1 on the NYSE and by 3.19-to-1 on the Nasdaq.
Attention is expected to shift to how corporate America is faring, with third-quarter earnings season beginning next week and several high-profile financial firms due to report on Tuesday. Analysts currently expect S&P 500 earnings growth of 30.6 per cent in aggregate for the July-to-September period, led by an expected 114.7 per cent jump in energy earnings and a 66.5 per cent estimated surge in technology results, according to LSEG. That would be smaller than the 54 per cent earnings increase recorded in the second quarter, though investors expect a largely positive season to underpin record-high stock markets. Among other movers, Roblox fell 1.6 per cent after Google and Unity announced a partnership on a new AI gaming platform that could compete with the gaming platform's offerings.
