(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.
