GE Aerospace slumped 7.8% despite raising its profit forecast for 2024, as persistent supply constraints impacted its revenue. It pulled the broader Industrials index 1.2% lower.
The Dow Jones Industrial Average fell 83.20 points, or 0.19%, to 42,848.40, the S&P 500 lost 16.77 points, or 0.29%, to 5,837.21 and the Nasdaq Composite lost 30.86 points, or 0.17%, to 18,509.14.
Further pressuring equities, U.S. Treasury yields were trading at near three-month highs as investors repriced expectations for the Federal Reserve’s policy trajectory, while also looking ahead to the fiscal impact of U.S. presidential election results.
The yield on the benchmark 10-year note rose as high as 4.222%, continuing a steady climb since early October after a bumper jobs report led investors to dial back expectations for the central bank to ease interest rates through the year.
Rate-sensitive megacap stocks slipped, with Apple falling 0.9% and Nvidia down 0.44%, weighing on the broader technology sector, which lost 0.2%.Microsoft, however, jumped 1.9%, bucking broader sector weakness.
“During the earnings season, you often get this kind of choppiness, but there’s also increased uncertainty relative to the interest rate direction,” said Chuck Carlson, CEO at Horizon Investment Services.
“Investors are trying to calibrate exactly what they think might be happening on the interest rate front.”
Stocks continued to retreat from record highs, as investors were cautious following six consecutive weeks of advances for major indexes, waiting for more earnings to see if Wall Street‘s rally could be sustained.
The next few weeks are likely to be volatile for equity markets, as investors scrutinize company earnings, fresh economic data and results of the U.S. election, followed by a central bank meeting.
Traders are pricing in a 91% chance of a 25-basis-point interest-rate cut in November, according to CME’s FedWatch.
Among other earnings, Verizon lost 4.5% as the telecom giant missed estimates for third-quarter revenue.
3M slipped 0.5%, reversing its premarket gains, despite raising the low end of its full-year adjusted profit forecast.
Meanwhile, General Motors leapt 9.1% after the legacy carmaker’s third-quarter results beat Wall Street estimates, while Lockheed Martin dipped 5.2% after results.
Rate-sensitive homebuilding stocks slipped, with the PHLX Housing index dropping 2.7%, dragged down by a 6% fall in shares of PulteGroup despite the company beating profit and revenue estimates.
“The earnings themselves have been pretty good, it’s just the companies highly sensitive to interest rates are probably going to find a bit of headwind right now as investors sort out the whole interest rate story,” Carlson said.
Baker Hughes and Texas Instruments are scheduled to report earnings after the bell.
Declining issues outnumbered advancers by a 2.03-to-1 ratio on the NYSE and by a 1.61-to-1 ratio on the Nasdaq.
The S&P 500 posted eight new 52-week highs and three new lows, while the Nasdaq Composite recorded 42 new highs and 47 new lows.