U.S. stocks had their worst day in two months on Wednesday as a batch of corporate earnings reports disappointed investors. Concerns of rising bond yields also dampened sentiment in stocks.
The Dow Jones industrial average fell 112.3 points to close at 23,329.46, marking its biggest one-day fall since Sept. 5. The index dropped nearly 200 points at its session lows. Boeing contributed the most to the losses.
The stock closed 2.8 percent lower after two of its businesses saw declines in revenue compared to last year, largely due to $329 million in costs due to production problems of the KC-46 aerial refueling tanker.
The S&P 500 declined 0.47 percent to finish at 2,557.15, with industrials and telecommunications leading decliners. The S&P had its worst day since Sept. 5. Chipotle Mexican Grill was the biggest decliner on the index, dropping 14.6 percent after its quarterly results missed the mark.
Chip maker Advanced Micro Devices saw its shares drop 13.5 percent despite beating the Street on earnings and revenue. The company said it expects a drop in revenue for the current quarter.
The Nasdaq composite slipped 0.5 percent to 6,563.89.
“I think you’re getting a bit of a pause” in the market, said Paul Townsen, managing director at Crossmark Global Investments. “Investors and analysts are sifting through these earnings and some of them aren’t too good.”
Stocks closed higher on Tuesday, with earnings from Caterpillar and 3M helping lift the Dow to a record high.
Equities have recently made new records as the prospects of U.S. tax reform have increased. CNBC reported Tuesday that House Republicans aim to unveil a tax reform bill by Nov. 1.
Also lifting stocks have been improving earnings results and strong economic data.
“You have economic growth and growing earnings against a backdrop of moderate inflation,” said Brent Schutte, chief investment strategist for Northwestern Mutual Wealth Management. “That is usually a recipe for stocks moving higher.”
But a rise in Treasury yields dampened sentiment on stocks Wednesday. The benchmark 10-year yield hit its highest level since March, trading near 2.43 percent. The yield started the week trading around 2.38 percent.
“You’re not seeing the yin and yang effect between bonds and stocks today,” said Daniel Deming, managing director at KKM Financial. “You’re getting a double whammy” with stocks and bonds falling.
In economic news, durable goods orders rose 2.2 percent in September, more than the expected increase of 1 percent.
[“Source-cnbc”]
