Highlights
Panicky selling tanked equities Wednesday after disappointing quarterly results from Alphabet and Tesla. The selloff was broad-based and the S&P 500 and Nasdaq had their worst showing since 2022. The Dow Jones industrial average lost 1.3 percent, the S&P 500 fell 2.3 percent and the Nasdaq dropped 3.6 percent. Bond yields fell at the short end and rose at the long end. The dollar slipped and oil prices rose.
Alphabet reported top line and bottom line beats but its ad sales at YouTube missed the market's ambitious expectations. Alphabet's higher than expected artificial intelligence spending aggravated worries that AI will be more costly and take longer to prove profitable. Separately, Tesla plunged by 12 percent after an earnings miss and news that its global unit sales dropped despite price cuts. The double-whammy of news from the two megacap champions knocked equities down and spurred heavy selling from trend-following commodity trading advisers. The market also reacted badly to a column by former New York Fed President William Dudley in which the former hawk urged immediate rate cuts to head off a recession.
Megacaps, chipmakers and growth stocks generally suffered the most. Among sectors, the biggest losers included information technology and consumer discretionary, both down about 4 percent. Other big decliners, down about 1 percent, included communications services, consumer staples, industrials and financials. Holding up best were energy, health care, real estate and utilities.
Visa dropped 4 percent after an unusual revenues miss and a warning that lower income consumers are pulling back. This followed a similar miss from American Express reported last week. Lamb Weston, the big potato supplier to restaurants, dropped 28 percent and was the worst performer in the S&P 500 after an earnings miss. The firm said restaurant traffic had been hit by menu price inflation.
Alphabet reported top line and bottom line beats but its ad sales at YouTube missed the market's ambitious expectations. Alphabet's higher than expected artificial intelligence spending aggravated worries that AI will be more costly and take longer to prove profitable. Separately, Tesla plunged by 12 percent after an earnings miss and news that its global unit sales dropped despite price cuts. The double-whammy of news from the two megacap champions knocked equities down and spurred heavy selling from trend-following commodity trading advisers. The market also reacted badly to a column by former New York Fed President William Dudley in which the former hawk urged immediate rate cuts to head off a recession.
Megacaps, chipmakers and growth stocks generally suffered the most. Among sectors, the biggest losers included information technology and consumer discretionary, both down about 4 percent. Other big decliners, down about 1 percent, included communications services, consumer staples, industrials and financials. Holding up best were energy, health care, real estate and utilities.
Visa dropped 4 percent after an unusual revenues miss and a warning that lower income consumers are pulling back. This followed a similar miss from American Express reported last week. Lamb Weston, the big potato supplier to restaurants, dropped 28 percent and was the worst performer in the S&P 500 after an earnings miss. The firm said restaurant traffic had been hit by menu price inflation.
Definition
Market Reflections track market reaction to the trading day's major events. Economic data, policymaker speeches, and company news are featured in this report as well as key indexes and financial instruments.
Description
Understanding why markets respond as they do is fundamental for an investor. Market Reflections help explain how the day's events, news, and data impact the outlook for the economy and for market prices.
