4:20pm: Tesla earnings take focus
Stocks finished sharply lower on Wednesday as concerns over potential delays in interest rate cuts dampened investor sentiment amid a busy earnings day.
At the close, the Dow Jones Industrial Average dropped over 400 points, nearly 1%, while the Nasdaq led losses, sliding 1.6%. The S&P 500 also declined by more than 0.9%.
Tesla Inc (NASDAQ:TSLA) is reporting earnings after the bell, as is International Business Machines Corp (NYSE:IBM).
3:50pm: Bank of Canada cuts policy rate
North of the border, the Bank of Canada (BoC) cut its policy rate by 50 basis points, bringing the rate to 3.75%.
This move was in line with expectations, and the central bank noted that inflation is back around its 2% target. The BoC aims to support economic growth while keeping inflation within the 1% to 3% range.
Governor Tiff Macklem highlighted that inflation risks are now "reasonably balanced," a shift from the previous month’s stance.
Bank of America analysts believe the BoC remains data-dependent, stating that future rate cuts will be based on economic conditions and inflation developments.
2:50pm: Stocks drift lower
Stocks continued to drift lower in the afternoon.
“The lack of enthusiasm among investors to chase this market is palpable. At least we have Tesla earnings tonight to liven things up, and which will help inject a bit of excitement into the market," commented Chris Beauchamp, Chief Market Analyst at online trading platform IG.
Beauchamp wanred that markets may struggle to make any meaningful progress even after Tesla's highly-anticipated earnings.
"Even without thinking about the US election, which is impossible to ignore, the upcoming payrolls report and Fed decision in coming weeks provide two additional hurdles to navigate. While volatility hasn’t exactly spiked, it still feels like there is a nasty surprise lurking just around the corner.”
1:30pm: Tesla looms
Investors will be on the lookout for signs Tesla is showing an inflection point in its margins during the third quarter.
“Margins will be a key focus on the conference call as the Street want to see a leveling off for Auto GM (ex credits) and track back heading towards the approximately 20% threshold level for 2025,” Wedbush analysts wrote.
“We need to start seeing this key metric head into the high teens for Q3/Q4 to give the Street comfort much of the price cuts are in the rear-view mirror showing better margin days are ahead for 2025.”
Regarding Tesla’s earnings, they see the company reporting headline numbers generally in line with the Wall Street consensus of revenue of $25.57 billion and earnings per share of $0.58, with potentially slight upside on the margins front.
Focus will also be on CEO Elon Musk’s comments around the consumer EV demand heading into Q4 and 2025, Wedbush believes.
They also expect investors will want more details on Tesla’s autonomous and AI strategy and an update on the timing for a sub $30,000 vehicle.
12:35pm: Investors worry over interest rates
The Nasdaq fell further on Wednesday as concerns over potential delays in interest rate cuts dampened investor sentiment during a busy earnings day, led by Boeing and Tesla.
By midday, the Dow Jones dropped over 300 points (0.7%), the Nasdaq fell about 1.4%, and the S&P 500 declined more than 0.6%.
Investor uncertainty about the Federal Reserve's interest rate path has stalled the stock market rally, with fears of prolonged higher rates pushing bond prices lower and the 10-year Treasury yield rising above 4.20%, its highest since July.
11:10am: Boeing CEO outlines changes needed at the company
More on Boeing, which earlier offered a stark view of the struggles it has faced this year.
Analysts at Bank of America believe that Boeing CEO Kelly Ortberg offered a positive direction for the company's strategy.
"It will take time to return Boeing to its former legacy but, with the right focus and culture, we can be an iconic company and aerospace leader once again," Ortberg said.
"We will be focused on fundamentally changing the culture, stabilizing the business and improving program execution, while setting the foundation for the future of Boeing."
Ortberg also highlighted changes in four particular areas: a "fundamental culture change" in the company, stabilizing the business, improving execution discipline on new platform commitments and building a new future.
"Boeing is an airplane company and at the right time in the future we need to develop a new airplane," Ortberg added. "But we have a lot of work to do before then.''
Shares of Boeing were down 3.7% in Wednesday morning trades.
9.51am: Wall Street gets off to negative start
Wall Street faced a negative start on Wednesday as a string of company updates once again failed to offset pressure from rising treasury yields.
The Nasdaq dipped 0.5% as the market opened, while the S&P 500 and Dow Jones headed for a third consecutive day of declines, falling by 0.3% and 0.6% respectively.
Boeing Co, Coca-Cola Co and AT&T Inc were among those reporting early on Wednesday, ahead of Tesla Inc later in the day.
Boeing slipped 0.9% as the market opened after unveiling surging losses on the back of mounting issues recently, while Coca-Cola also fell by 2.2% as results signalled sluggish global demand.
AT&T topped estimates for the third quarter in the meantime, prompting shares to tick up 0.7%.
An increase in bond yields continued to weigh overall though, with the rate on benchmark 10-year treasuries climbing further to 4.24% on Tuesday morning.
7.44am: Stocks seen lower
Wall Street looked set to remain under pressure on Wednesday morning as the likes of rising treasury yields continued to hit stocks.
Futures had the Dow Jones down 0.5% ahead of the opening bell, with the S&P 500 and Nasdaq also seen 0.2% and 0.3% lower.
This would follow declines for the Dow Jones and S&P 500 on Tuesday, with the latter facing its first back-to-back fall since early September.
Equities have faced pressure in recent days, as growing bets on a win for Donald Trump in next month’s presidential election have fuelled increases for gold and pushed up bond yields.
The benchmark 10-year treasury yield climbed a further three basis points to 4.23% on Wednesday as a result, while gold surpassed the US$2,750 an ounce mark for the first time.
Adding pressure to the Dow Jones was a 6.8% drop in McDonald’s Corp shares ahead of the market’s open, after news of an e.coli outbreak linked to its quarter pounder burgers… Read more
Elsewhere on Wednesday, attention was on Boeing Co (NYSE:BA, ETR:BCO)’s third-quarter update, which showed losses had surged to US$5.76 billion, before Tesla Inc (NASDAQ:TSLA)’s update later on.