Stocks Fall as Big Tech Hit Before Tesla’s Results: Markets Wrap

(Bloomberg) — A slide in some of the biggest tech companies dragged down stocks, with traders also wading through a slew of corporate earnings. Bets on less aggressive Federal Reserve rate cuts continued to lift bond yields.

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Equities extended losses into a third consecutive session, with Nvidia Corp. down 2.5% to lead megacaps lower. Qualcomm Inc. got hit as Arm Holdings Plc canceled a license that allowed the company to use Arm’s intellectual property to design chips. As Tesla Inc. gets ready to report is quarterly results, Wall Street will be watching for signs that slowing sales are close to a trough and keeping an eye on margins.

“Earnings season is heating up and we will soon hear from big tech companies,” said David Laut at Abound Financial. “This is the ‘show-me-the-money’ quarter, as investors are becoming impatient with AI spend that may or may not yield extra profits. Tech valuations are priced for perfection and any disappointment could spark a pullback.”

Traders also parsed the latest economic data released before the Fed’s Beige Book. US sales of previously owned homes declined to an almost 14-year low in September as prospective buyers waited for a further decline in mortgage rates and more attractive asking prices.

The S&P 500 fell 0.7%. The Nasdaq 100 dropped 1%. The Dow Jones Industrial Average slipped 0.9%. Boeing Co. dropped after signaling the company’s woes will take time to fix. Texas Instruments Inc. rallied after saying customers are working through excess inventory and the timing is right for an order recovery.

The yield on 10-year Treasuries rose three basis points to 4.24%. The dollar gained. The loonie retreated after the Bank of Canada stepped up the pace of easing. The yen hit the lowest in almost three months, reviving concern that Japan may act to support the currency. Oil dropped.

Swap prices reflect less than a 100% certainty that the central bank reduces rates at each of its two remaining policy meetings. The bond market is also trimming bets on the degree of Fed rate reductions over the next year. Traders will get more clarity next week on how much officials are likely to ease, with the release of a key labor -market reading for October.

Andrew Brenner at NatAlliance Securities noted that Treasury yields continue to edge higher even in the face of a large Canadian cut in rates.

“In the US, it is about the election and potential sweep,” Brenner said. “That is what is being built into the rate structure, which is giving the vigilantes the green light. It will reverse, but it might take a severe employment number or a surprise in the election. But it won’t be today.”

Bank of America Corp. Chief Executive Officer Brian Moynihan has urged Fed policymakers to be measured in the magnitude of interest-rate reductions.

“They were late to the game” in lifting borrowing costs in 2022, Moynihan said in an interview with Bloomberg TV in Sydney on Wednesday in his first trip to Australia. “They have got to make sure they don’t go too hard now” with cuts.

As the US dollar strengthens further against its key trading partners, UBS’s Chief Investment Office maintains their “unattractive view” on the greenback.

“Investors should consider the potential impact of a depreciating US dollar on their portfolios, and look to hedge dollar assets, switch USD cash and fixed income exposure into other currencies, and reduce exposure through options,” said Solita Marcelli at UBS Global Wealth Management.

Corporate Highlights:

AT&T Inc. gained more mobile subscribers in the third quarter than analysts expected, continuing the winning streak from the previous period.
Hilton Worldwide Holdings Inc. lowered its profit outlook, as the addition of new hotels to its global system failed to offset slower travel demand.
Coca-Cola Co. dropped as investors weighed how much longer the soft-drink purveyor could raise prices without getting customers to buy more of its beverages.
Starbucks Corp. pulled its guidance for 2025, calling attention to the scope of the problems facing new Chief Executive Officer Brian Niccol.
A severe E. coli outbreak likely tied to onions served on McDonald’s Corp.’s Quarter Pounders sickened dozens of people in the US, mainly in Colorado and Nebraska, and killed one, the US Centers for Disease Control and Prevention said.
Spirit Airlines Inc. jumped after the Wall Street Journal reported Frontier Group Holdings is exploring a renewed bid for the embattled carrier.
Deutsche Bank AG said it will have to set aside more money than expected for souring debt, the second time this year it had to adjust its guidance.

Key events this week:

US new home sales, jobless claims, S&P Global Manufacturing and Services PMI, Thursday
UPS, Barclays earnings, Thursday
Fed’s Beth Hammack speaks, Thursday
US durable goods, University of Michigan consumer sentiment, Friday

Some of the main moves in markets:

Stocks

The S&P 500 fell 0.7% as of 11:23 a.m. New York time
The Nasdaq 100 fell 0.9%
The Dow Jones Industrial Average fell 0.9%
The Stoxx Europe 600 fell 0.3%
The MSCI World Index fell 0.7%

Currencies

The Bloomberg Dollar Spot Index rose 0.3%
The euro fell 0.2% to $1.0782
The British pound fell 0.3% to $1.2942
The Japanese yen fell 1.2% to 152.92 per dollar

Cryptocurrencies

Bitcoin fell 2% to $66,163.26
Ether fell 3.5% to $2,541.73

Bonds

The yield on 10-year Treasuries advanced three basis points to 4.24%
Germany’s 10-year yield was little changed at 2.32%
Britain’s 10-year yield advanced five basis points to 4.21%

Commodities

West Texas Intermediate crude fell 1.7% to $70.54 a barrel
Spot gold fell 1.4% to $2,709.95 an ounce

This story was produced with the assistance of Bloomberg Automation.