U.S. stocks and the price of gold fell on Wednesday, as momentum on Wall Street reverses.
The S&P 500 sank 0.5 per cent, though it’s still within one per cent of its all-time high set earlier this month. The Dow Jones Industrial Average dropped 334 points, or 0.7 per cent, from its record set the day before, while the Nasdaq composite fell 0.9 per cent.
Netflix helped drag the market lower after delivering a weaker profit for the latest quarter than analysts expected. The pressure is on the video streamer and on companies broadly to deliver solid growth in profits. That would counter criticism that their stock prices shot too high following a 35 per cent romp for the S&P 500 from a low in April.
Netflix’s stock came into the day with a jump of 39.3 per cent for the year so far, more than double the S&P 500’s gain, before it dropped 10.1 per cent on Wednesday.
AT&T fell 1.9 per cent after delivering a profit that only matched analysts’ expectations, while Texas Instruments sank 5.6 per cent after its profit fell just short of forecasts.
On the winning side of Wall Street was Intuitive Surgical, which sells robotic-assisted surgical systems. It jumped 13.9 per cent after reporting better profit for the latest quarter than analysts expected. Boston Scientific climbed 4 per cent after likewise topping analysts’ profit expectations.
Capital One Financial rose 1.5 per cent, and Western Alliance Bancorp climbed 3.2 per cent following their own profit updates that beat analysts’ expectations. The report from Western Alliance was particularly welcome after it helped shake confidence in the industry last week. It’s one of several banks that had warned of potentially bad loans on its books, possibly because of fraud.
Beyond Meat, meanwhile, swung sharply through a manic Wednesday. After surging as much as 112 per cent in the morning, its stock erased all of that to finish with a drop of 1.1 per cent. It’s still up 454.5 per cent for the week so far in the midst of its meme-stock run.
The maker of plant-based meat alternatives was the biggest holding in the Roundhill Meme Stock exchange-traded fund, as of Tuesday. The ETF holds stocks where investors have piled in because they’re hoping to catch a wave of momentum, almost regardless of how or even what the businesses themselves are doing.
All told, the S&P 500 fell 35.95 points to 6,699.40. The Dow Jones Industrial Average dropped 334.33 to 46,590.41, and the Nasdaq composite sank 213.27 to 22,740.40.
Momentum continued to head the other way for gold, which fell 1.1 per cent to US$4,065.40 per ounce. That’s after Tuesday’s 5.3 per cent slide knocked it off its record high.
Many of the same factors that drew buyers to gold this year are still there. The expectation along Wall Street is still for the Federal Reserve to cut interest rates through next year. Concerns are growing about inflation remaining high. And the worrisome mountains of debt that the U.S. and other governments worldwide have amassed are only rising further.
But no investment’s price goes up forever, and criticism had been growing that gold’s price had gone too far, too fast after it shot up even more than the U.S. stock market. Gold’s price is still up 56 per cent for the year so far.
In stock markets abroad, indexes were mixed across Europe and Asia.
London’s FTSE 100 added 0.9 per cent after a report on U.K. inflation raised hopes for another cut to interest rates next month. South Korea’s Kospi jumped 1.6 per cent for another one of the world’s bigger gains. But indexes fell 0.9 per cent in Hong Kong and 0.6 per cent in Paris.
In the bond market, the yield on the 10-year Treasury eased to 3.95 per cent from 3.98 per cent late Tuesday.
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AP Business Writers Yuri Kageyama and Matt Ott contributed.
By Stan Choe, The Associated Press. AP business writers Yuri Kageyama and Matt Ott contributed.