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Stocks dropped Wednesday as earnings season gained steam and Treasury yields climbed to multiyear highs.
The Dow Jones Industrial Average slipped 332.57 points, or 0.98%, to finish at 33,665.08. The S&P 500 slid 1.34% to 4,314.60, while the Nasdaq Composite dropped 1.62% to 13,314.30. None of the three major indexes traded in positive territory at any point during the session.
The 10-year Treasury yield climbed on Wednesday, breaking above 4.9% for the first time since 2007. Meanwhile, the average rate on the popular 30-year fixed mortgage rate just hit 8%, the highest level since 2000.
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"Markets are trying to figure out where rates are going to peak," said Jamie Cox, managing partner at Harris Financial. "Markets want to see what happens when rates hit 5%."
J.B. Hunt lost 8.9% in the session on the back of worse-than-expected earnings, while United Airlines tumbled 9.7%{
United Airlines falls on soft guidance
Money Report
Shares of United Airlines dropped nearly 5% in extended trading after it warned that warning that elevated fuel costs and a halt in Tel Aviv flights amid the Israel-Hamas war would hit current-quarter profits.
The company said it expects adjusted earnings to range between $1.50 and $1.80 per share, versus the $2.06 per share expected by analysts polled by LSEG, formerly known as Refinitiv.
Despite the after-hour moves, United Airlines topped Wall Street's expectations for the recent quarter. The airline reported adjusted earnings of $3.65 per share on $14.48 billion in revenue. That topped the EPS of $3.35 and $14.44 billion anticipated by analysts.
— Samantha Subin, Leslie Josephs
soft guidance Morgan Stanley overshadowed beatsOn the other hand, Procter & Gamble rose 2.6% after beating analyst expectations for the quarter. Investors are now looking to Netflix and Tesla earnings expected after the bell on Wednesday.
Just over 10% of companies in the S&P 500 have reported results, according to FactSet. Of those that have already reported, about 78% have surpassed analyst expectations.
Charles Schwab senior investment strategist Kevin Gordon said the market focus is shifting to revenue growth this earnings season. He added that investors are trying to decipher which companies are seeing increased demand and which are boosting their earnings through cost-cutting measures alone.
"We're at a point in the cycle now where companies really need to start showing actual demand coming back online," he said. "If that's not the case, then you're probably not going to get as much of a lift as people were expecting."
Chip stocks such as Nvidia and Advanced Micro Devices struggled for a second session as investors continued selling off. The moves came after the U.S. Department of Commerce announced plans to tighten restrictions on the sale of advanced artificial intelligence chips to China on Tuesday.
Wall Street also continued to assess the impact of the ongoing Israel-Hamas war. U.S. President Joe Biden visited Israel on Wednesday as part of a trip aimed at showing solidarity with the country.
Stocks end Wednesday lower
The three major indexes finished Wednesday's session down.
The Dow closed the session more than 330 points lower, a loss of around 1%. The S&P 500 shed about 1.3%, while the Nasdaq Composite dropped around 1.6% on the day.
— Alex Harring
Raymond James upgrades Brinker and First Watch to strong buy
Restaurant stocks have been pummeled over the past three months, and the factors weighing on the sector aren't going away anytime soon, said Raymond James analyst Brian Vaccaro. He upgraded shares of Chili's owner Brinker International and First Watch Restaurant Group to strong buy from outperform on Wednesday, but tellingly trimmed both companies' price targets.
Brinker shares are down about 1% in trading, and are up about 4% year to date. Vaccaro's price target falls to $40, which still suggests big moves ahead. Meanwhile, First Watch shares added 3.6% in today's trading, building on its winning streak this year. The brunch restaurant's stock has gained 29% year to date. Vaccaro sees shares going to $22.
Among the factors that are limiting restaurant stock growth are the return of student loan payments, which could hurt consumers' ability to eat out; higher interest rates and speculation that the use of new weight loss drugs could hurt restaurant demand.
—Christina Cheddar Berk
Investors should look overseas for emerging opportunities in value stocks, says David Herro
The recent Israel-Hamas war has sent investors scurrying to search for emerging opportunities overseas, according to David Herro, chief investment officer of Harris Associates.
"When you have these extreme price reactions — which we've seen incidentally in the last three or four months, particularly in Europe — it actually becomes an opportunity to buy quality at low price, which is the essence of value investing," he told CNBC's "Squawk on the Street" on Wednesday morning. "We view this as an opportunistic subset that we can take advantage of given our investment time horizon of three to five years."
More specifically, Herro said that investors are slowly and continuously diversifying by increasing their international exposure to regions that are friendlier to the U.S., such as Europe, over others Russia or China.
"We focus on where the company conducts business" over where it's based, Herro added. "And if we can get a good quality business at a low price and that price has been severely impacted by zip code, this is a great investment opportunity."
— Lisa Kailai Han
Citi cuts Nvidia price target on U.S. chip export restrictions to China
The artificial intelligence boom's favorite play comes with greater risks now, according to Citi.
The firm maintained its buy rating on Nvidia but significantly lowered its price target on the stock, after the U.S. Department of Commerce announced new export restrictions Tuesday that would curb the sale of more advanced artificial intelligence chips to China.
"We are de-risking our FY25/26 estimates and assume low likelihood of US government granting export licenses," analyst Atif Malik wrote in a Wednesday note.
Shares of Nvidia dropped more than 4% on Wednesday.
CNBC Pro subscribers can read more here.
— Pia Singh
Bank of America downgrades Albemarle
Albemarle shares shed 9% on Wednesday after Bank of America downgraded the company to underperform from a neutral rating, citing a challenged outlook for lithium.
"As the lithium market balances shift to adequately supplied in 2023 and oversupplied in 2024/2025 ... we expect to see a period of earnings and margin pressure across the value chain," wrote analyst Steve Byrne in Wednesday note to clients.
Along with the downgrade, Bank of America trimmed its price target to $161 from $212 a share, reflecting 5% downside from Tuesday's close.
Byrne views better opportunities elsewhere, and in companies with earnings closer to an inflection point. He also expressed concerns that softer market prices could stretch into 2025.
— Samantha Subin
Stocks trade near session low as selloff intensifies
Stocks have taken another leg down and are trading near session lows with less than an hour of trading left.
The Dow was more than 300 points down, which equates to a drop of around 0.9%, with around 45 minutes left in the trading day. The S&P 500 and Nasdaq fell as low as 1.3% and 1.6%, respectively, late in the session.
To be sure, it was still a negative day without the 11th-hour drops. No index has touched positive territory at any point in the session, though the Dow crept as close as 0.02% down at session highs.
— Alex Harring
Airlines drag on Dow Transportation as index heads for worst day since Apri
The Dow Jones Transportation Average dropped 2.7% on Wednesday, putting the index on pace for its worst day since April 26 when it lost about 3.6%.
Airlines including United Airlines, American Airlines, Alaska Air and Delta Air Lines dragged the transportation index lower, with each stock losing roughly 4% or more during the day's trading session. United Airlines dropped 8.6% and is on pace for its worst day since late July in 2022, when its shares dropped nearly 10.2%.
J.B. Hunt Transportation Services also pushed the index lower on Wednesday. The stock plunged 7.2% after posting worse-than-expected earnings per share and revenue for the third quarter.
— Pia Singh, Gina Francolla
Stocks poised for losses entering final trading hour
The three major indexes were on track to end Wednesday's session lower as trades kicked off the final hour.
The Dow was down about 0.8% shortly after 3 p.m. ET. The S&P 500 and Nasdaq Composite dropped around 1.2% and 1.5%, respectively.
— Alex Harring
Newly public chipmaker Arm can rally more than 20%, KeyBanc says
KeyBanc initiated coverage of semiconductor and software design company Arm with an overweight rating and $65 price target.
"ARM stands to benefit as computing requirements across mobile, data center, auto, and IoT become increasingly more demanding and complex," John Vinh said in a Tuesday note, noting the growing chip design complexity within the industry. "This will only increase the industry's reliance on Arm IP, ultimately resulting in royalty rate expansion and market share gains."
Read here for more on the upgrade.
— Pia Singh
Equities appear in 'pretty good shape' so long as Middle East conflict remains contained, says Citi's Chronert
Equities are in "uncertain mode" as geopolitical tensions persist in the Middle East, but the market should remain in decent condition so long as the conflict is contained, according to Citi's Scott Chronert.
"The way I'm thinking about it is contained versus escalating," the U.S. equity strategist told CNBC's "Squawk on the Street" on Wednesday. "As long as it remains contained, I think that our view towards U.S. equities is in pretty good shape."
Fundamentals for the stock market also appear good, further underscored by the third-quarter earnings reported so far, he added.
— Samantha Subin
Economy shows no change, hiring and prices up, Fed report says
The U.S. economy showed "little or no change" over the past six weeks, the Federal Reserve reported Wednesday in its Beige Book report.
Spending was described as "mixed" while prices increased "at a modest pace," the report said. Companies said they expect inflation to continue rising, thought at a slower pace.
On employment, most areas saw "slight to moderate increases" as firms hired "less urgently." More broadly, respondents expected economic growth ahead to be "stable or having slightly weaker growth."
—Jeff Cox
Consumer staples and energy stocks buck S&P 500 downturn
Consumer staples and energy stocks were able to sidestep the S&P 500's leg down on Wednesday.
Energy climbed 1% in the session, while consumer staples added 0.6%. The other nine sectors traded lower, dragging the broad index down 0.7%.
Valero Energy and Phillips 66 led the energy sector up with gains of more than 2% each. The consumer staples sector was aided by Procter & Gamble's advance of more than 2% on the back of earnings.
— Alex Harring
Stocks making the biggest movers midday: United Airlines, Nvidia and more
These are the stocks making the biggest moves during midday trading:
- United Airlines — The airline stock dropped more than 8%. On Tuesday, the company warned that pricier jet fuel and a halt to the carrier's Tel Aviv flights during the Israel-Hamas war will eat into its profits in the last three months of the year.
- Nvidia — The chipmaker slumped more than 3% a day after the U.S. announced plans to tighten restrictions on artificial intelligence chips sold to China.
- Morgan Stanley — The bank stock slid more than 7% after the firm's wealth management division posted disappointing results.
Read the full list of stocks moving here.
— Samantha Subin
Netflix and Tesla tumble as investors brace for earnings
Shares of Netflix and Tesla slid in Wednesday's session as traders readied for earnings expected after the bell.
Streaming giant Tesla dropped nearly 2% in the session, while electric vehicle maker Tesla retreated by more than 3%.
— Alex Harring
Regional bank stocks slide
Regional bank stocks extended their losses in late morning trading as Treasury yields continued to push higher.
The SPDR S&P Regional Banking ETF (KRE) fell 2%. Shares of New York Community Bancorp fell 3%.
Rising yields were one of the factors that put pressure on regional bank stocks this spring, contributing to the collapse of Silicon Valley Bank.
— Jesse Pound
Key Treasury yields rise, pressuring equities
U.S. Treasury yields rose on Wednesday, with the 10-year hitting a fresh multiyear high. The move up pressured stocks.
The 10-year Treasury yield was up by nearly 7 basis points to 4.911%, putting it above 4.9% for the first time since 2007. Meanwhile, the 2-year Treasury yield was climbed almost 2 basis points to 5.231%, hovering around levels last seen in 2006.
Also of the note, the 5-year Treasury touched as high as 4.937%, its top level since 2007.
Yields and prices move in opposite directions and one basis point equals 0.01%.
— Alex Harring, Sophie Kiderlin
Thomas Peterffy says brokerage clients are 'by far not fully invested'
Interactive Brokers CEO Thomas Peterffy told "Squawk Box" that his firm's customers have been holding back from putting their money in the stock market.
"They are by far not fully invested, and many people are short," Peterffy said.
The brokerage CEO also said that stock trading volumes have been going down for several quarters, but that has been offset by the rise in options trading, including zero-day options.
Shares of Interactive Brokers were down 4% in premarket trading despite strong headline numbers for the company's third-quarter results. The brokerage reported $1.55 in adjusted earnings per share on $1.14 billion of adjusted revenue. Analysts surveyed by LSEG, formerly Refinitiv, were expected $1.51 per share and $1.11 billion of revenue.
— Jesse Pound
Chipmakers fall for a second session after U.S. curbs China exports
Chipmakers fell for a second session after the U.S. Department of Commerce on Tuesday announced plans to tighten restrictions on artificial intelligence chip exports to China.
Nvidia shares lost nearly 3% in early-morning trading, while Advanced Micro Devices fell 2%. Marvell Technology dropped 2.5%, while Intel dipped 1.4%. Citing heightened risks from the export curbs, Citi also trimmed its price target on shares of Nvidia.
ASML Holding's stock shed nearly 5% after posting a slight miss on net sales and warning of flat 2024 sales.
— Samantha Subin
United Airlines, J.B. Hunt lead industrials' losses
The industrials sector led the S&P 500's losses Wednesday, with United Airlines and J.B. Hunt Transport Services leading the sector's downturn.
Both companies fell on disappointing quarterly earnings results. United fell 8%, while J.B. Hunt declined 6.3%. American Airlines saw the third-largest losses in the sector, losing more than 5% ahead of its earnings announcement Thursday before the bell.
— Hakyung Kim
Gold prices rise 1% to highest level in nearly a month
Gold prices rose more than 1% on Wednesday to trade near their highest level since Sept. 20.
U.S. gold futures were last up 1.1% to trade at $1,957.5, while silver gained 1.4% to trade near its highest level since Sept. 29.
The move in gold prices came as recent events in the Middle East heightened fears of an escalation in the Israel-Hamas conflict.
— Samantha Subin
Morgan Stanley headed for worst day in more than three years
Shares of Morgan Stanley dropped 6.4% in early trading, putting them on track for their worst one-day decline since June 11, 2020 — when they shed 8.46%. That move comes after the company reported its third-quarter report.
— Fred Imbert
Stocks open lower
Stocks opened Tuesday's session down.
The Dow was down 0.1% shortly after 9:30 a.m. ET. The S&P 500 slid 0.4%, while the Nasdaq Composite shed 0.7%.
— Alex Harring
ASML is a top pick despite mixed third-quarter results, Bank of America says
Bank of America is confident in semiconductor equipment maker ASML Holding as a long-term play despite the company's mixed earnings report, naming the stock a top pick and reiterating a buy rating.
The Dutch technology firm reported slightly weaker-than-expected net sales for third quarter and a net profit that was about in line with an LSEG consensus forecast. Still, ASML reaffirmed its guidance for net sales to increase 30% year on year for 2023.
Shares dipped 2.1% in early morning trading. CNBC Pro subscribers can read here for more on the upgrade.
— Pia Singh
Housing starts less than expected, permits top outlook
Housing starts accelerated in September, though at a slower than expected pace, while building permits fell, but by less than expected, the Commerce Department reported Wednesday.
Private owned starts totaled a seasonally adjusted 1.358 million for the month, up 7% from August but below the Dow Jones estimate for 1.37 million. Starts were down 7.2% from a year ago.
At the same time, permits totaled 1.473 million, 4.4% below the August level but ahead of the forecast for 1.45 million. Permits were off 7.2% from September 2022.
—Jeff Cox
See the stocks moving before the bell
These are some of the stocks making the biggest moves in premarket trading on Wednesday:
- Citizens Financial Group — The regional bank lost 3.7% after its third quarter results missed both top and bottom lines.
- United Airlines — The airline stock slid more than 5% after the company released soft guidance for its fourth-quarter earnings.
- Interactive Brokers — Shares of the trading platform fell 3.8% in premarket trading even though the company's earnings report was stronger than was anticipated by analysts.
— Alex Harring, Lisa Kailai Han
Gold miners ETF rises as metals notch October highs
The VanEck Gold Miners ETF (GDX) rose more than 1% in premarket trading as gold and silver hit new highs for the month.
With the advance, the ETF is on track for its fourth straight winning session. The leg up comes as prices for gold and silver hit levels not seen since September on Wednesday.
— Alex Harring, Gina Francolla
Morgan Stanley slides as investors analyze earnings report
Shares of Morgan Stanley fell about 3% before the bell as traders parsed the financial giant's third-quarter earnings release.
Morgan Stanley beat the consensus forecasts of analysts polled by LSEG, formerly known as Refinitiv, on both lines. The bank reported $1.38 in earnings per share, topping the expectation of $1.28 per share. Revenue also topped estimates, coming in at $13.27 billion against a $13.23 billion forecast.
Morgan Stanley was the latest of several banks to report earnings in recent days.
— Alex Harring, Hugh Son
Procter & Gamble rises on expectation-beating earnings
Procter & Gamble advanced more than 1% in premarket trading after the consumer packaged goods company posted a better quarterly report than Wall Street expected.
The company reported $1.83 in earnings per share and $21.87 billion in revenue. Meanwhile, analysts polled by LSEG, formerly known as Refinitiv, had forecasted $1.72 earned per share and $21.58 billion in revenue.
— Alex Harring
Fed's Harker says rates may stay at current levels
Philadelphia Federal Reserve President Patrick Harker, a voting member in the central bank's policymaking committee for 2023, said rates are at a level where further increases may not be needed.
"This is a time where we just sit for a little bit. It may be for an extended period; it may not. But let's see how things evolve over the next few months," Harker told The Wall Street Journal. He added that while recent data points to economic strength, contact with individual businesses indicates "things seem to be slowing down."
— Fred Imbert
Country Garden says it is unable to meet its offshore debt obligations: Reuters
Chinese property developer Country Garden Holdings has said it does not expect to be able to meet all of its offshore debt obligations, Reuters reported.
This comes as the grace period for a $15 million bond coupon payment expired on Wednesday, which meant that the company has likely defaulted on its offshore debt.
In a statement to Reuters, the company said that it hopes to seek a holistic solution to resolve its existing difficulties.
Last week, the developer warned that it expects it will not be able to make all of its offshore repayments, including those issued in U.S. dollar notes.
— Lim Hui Jie, Reuters
Asia chip stocks mostly inch down after new U.S. restrictions on AI chip exports to China
Asian chipmaker and related stocks were mostly down on Wednesday, after the U.S. announced new restrictions on exports of artificial intelligence chips to China.
Shares of chip manufacturing giant Taiwan Semiconductor Manufacturing Corp slipped as much as 1.27%, while counterpart Hon Hai Precision Industry — also known as Foxconn — inched down 0.47%.
On the other hand, shares of domestic Chinese chipmaker SMIC spiked by as much as 4.62%, although it later pared gains to trade 2.43% higher. Counterpart Hua Hong Semiconductor lost 0.41%.
— Lim Hui Jie
China September retail sales rise, urban unemployment at near two-year low
China's retail sales rose in September, while the urban unemployment rate cooled to a near two-year low according to data from the Chinese government.
Retail sales rose 5.5% last month, against an estimated 4.9% rise according to economists polled by Reuters.
Urban unemployment stood at 5% in September, its lowest level since November 2021, down from a prior reading of 5.2% in August.
Overall, China's third-quarter economic growth was stronger than expected, boosting hopes that the world's second-largest economy will meet Beijing's annual target this year.
— Shreyashi Sanyal
China economy grows 4.9% in third quarter, beating expectations
China's economy grew 4.9% year-on-year in the third quarter, higher than the 4.4% expansion that was expected from economists polled by Reuters.
However, this figure was lower than the 6.3% year-on-year expansion seen in the second quarter.
Read the full story here.
— Lim Hui Jie
Alan Schwartz says, with balance sheets strong and PE pushed away, corporates are ready to return to M&A
Large corporations have strong balance sheets and are ready to return to the merger and acquisition market now that private equity investors have been pushed aside as interest costs have risen, Guggenheim Partners executive chairman Alan Schwartz said Tuesday on CNBC's "Squawk Box."
"Now they're seeing the chance to come back in, right, because they kept their balance sheets strong," the former Bear Stearns CEO said. "At the same time, the macro environment, especially geopolitical and all these other things, you know, creates concerns in the boardroom as to whether now's the time, or wait on some of these things."
Guggenheim advises lots of C-suite executives, and "what we're saying is we saw a big drop in M&A activity, right, when the capital markets tied up for a lot of the private deals, but now you're seeing a lot of, let's say, discussions and activity beginning clearly picking up from the corporate side that are seeing their opportunity to come in. But you know, how many of those will get across the line?"
— Scott Schnipper
Interactive Brokers, J.B. Hunt among stocks moving the most after the bell
These are some of the companies making the most significant moves in extended trading:
- Interactive Brokers Group — Shares of the electronic broker dropped more than 4% in after-hours trading. Interactive Brokers posted third-quarter adjusted earnings of $1.55 per share on adjusted revenue of $1.14 billion.
- J.B. Hunt Transport Services — The transportation and logistics stock lost 3.6% after reporting third-quarter results that fell short of Wall Street's expectations.
- Omnicom Group — The marketing company's shares slipped 1.4%, even as the company narrowly beat analysts' expectations in the latest quarterly report.
Read the full list of companies moving here.
— Samantha Subin
United Airlines falls on soft guidance
Shares of United Airlines dropped nearly 5% in extended trading after it warned that warning that elevated fuel costs and a halt in Tel Aviv flights amid the Israel-Hamas war would hit current-quarter profits.
The company said it expects adjusted earnings to range between $1.50 and $1.80 per share, versus the $2.06 per share expected by analysts polled by LSEG, formerly known as Refinitiv.
Despite the after-hour moves, United Airlines topped Wall Street's expectations for the recent quarter. The airline reported adjusted earnings of $3.65 per share on $14.48 billion in revenue. That topped the EPS of $3.35 and $14.44 billion anticipated by analysts.
— Samantha Subin, Leslie Josephs
Stock futures open lower
Stock futures opened slightly lower on Tuesday evening.
Futures connected to the Dow Jones Industrial Average dipped 0.1%, or 30 points, while S&P 500 futures edged down 0.1%. Nasdaq-100 futures lost 0.07%.
— Samantha Subin