Stocks spiraled Wednesday as the latest batch of corporate earnings reports and hawkish Fed speak spooked investors.
Rising Treasury yields did little to lift sentiment ahead of tonight's highly anticipated quarterly results from two mega-cap companies and tomorrow's speech from Fed Chair Jerome Powell.
Third-quarter earnings season is really getting started, with several stocks making notable post-earnings moves Wednesday. Morgan Stanley (MS), for one, fell 6.8% after the big bank reported weaker-than-expected net interest income and investment banking revenue for its third quarter. Still, the company beat on both its top and bottom lines.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
Elsewhere, United Airlines (UAL) slumped 9.7% after the air carrier reported earnings. UAL disclosed third-quarter earnings ($3.65 per share) and revenue ($14.5 billion) that were higher than analysts were expecting. However, the company warned fourth-quarter figures could come in lower than anticipated if flights to Tel Aviv remain suspended due to the war between Israel and Hamas.
Still, Argus Research analyst John Staszak maintained a Buy rating on the airline stock, saying he expects "demand for air travel to continue to recover from the pandemic, with strong growth in both business and international travel." The analyst is also looking "for higher revenue to outweigh inflationary headwinds."
Staszak isn't alone in his bullish outlook toward UAL. Of the 20 analysts following the industrial stock tracked by S&P Global Market Intelligence, nine say it's a Strong Buy, six call it Buy, three have it at Hold, and two rate it Sell or Strong Sell. This works out to a consensus Buy recommendation. What's more, analysts expect United Airlines to average earnings per share growth of 63.3% over the next three to five years.
Yields spike after Fed speeches
Also in focus Wednesday were a round of speeches from Federal Reserve officials, including one from New York Fed President John Williams. Speaking at a moderated event at Queens College in New York earlier, Williams said interest rates will need to stay higher "for some time" in order to bring inflation down to the Fed's 2% target.
Shortly after Williams took the podium, the main indexes sold off sharply and continued falling into the close. The rate-sensitive Nasdaq Composite ended the session down 1.6% at 13,314, as yields on the 2-year and 10-year Treasury bonds hit their highest levels since 2006 and 2007, respectively. The S&P 500 gave back 1.3% to 4,314, and the Dow Jones Industrial Average was off 1.0% at 33,665.
Mega-cap earnings, Powell on deck
Looking ahead, there's plenty of activity to hold investors' attention Thursday. For one, market participants will have the chance to react to the onslaught of earnings reports due overnight. After Wednesday's close, Netflix (NFLX) reported a third-quarter earnings beat, sending its shares 10% higher in after-hours trading. Tesla (TSLA) is also reporting Q3 earnings this evening.
Additionally, the most-anticipated central bank event of the week comes tomorrow, with Fed Chair Jerome Powell set to speak around lunchtime at the Economic Club of New York. UBS Global Research chief U.S. economist Jonathan Pingle doesn't expect Powell "to assuage market participants' concerns over rising yields." Rather, the Fed chair will likely "walk a fine line between signaling a willingness to wait and not raise rates at the November meeting," while also indicating the central bank's willingness to hike rates if jobs and inflation data doesn't cool, Pingle says.
Related content
-
What You Learn Becoming Your Mother's Financial CaregiverWriter and certified financial planner Beth Pinsker talks to Kiplinger about caring for her mother and her new book.
-
I want to help pay for my grandkids' college. Should I make a lump-sum 529 plan contribution or spread funds out evenly through the years?We asked a college savings professional and a financial planning expert for their advice.
-
3 Major Changes Investors Must Prepare for in 2026A possible stock market bubble. Trump accounts. Tokenized stocks. These are just three developments investors need to be aware of in the coming months.
-
Stocks Close Out Strong Month With Solid Amazon Earnings: Stock Market TodayAmazon lifted its spending forecast as its artificial intelligence (AI) initiatives create "a massive opportunity."
-
What Netflix Stock's 10-for-1 Split Means for InvestorsNetflix announced its long-awaited stock split after Thursday's close. NFLX will start trading on a split-adjusted basis ahead of the November 17 open.
-
Stocks Sink with Meta, Microsoft: Stock Market TodayAlphabet was a bright light among the Magnificent 7 stocks today after the Google parent's quarterly revenue topped $100 billion for the first time.
-
Dow, S&P 500 Slip on December Rate Cut Worries, Nvidia Boosts Nasdaq: Stock Market TodayNvidia became the first company ever to boast a $5 trillion market cap, but it wasn't enough to lift the Dow and the S&P 500.
-
Stocks Hit Fresh Highs Ahead of the Fed As Earnings Pump Optimism: Stock Market TodaySHW and UNH were two of the best Dow Jones stocks Tuesday, thanks to solid earnings reports, and MSFT closed with a $4 trillion market cap.
-
US-China Trade Hopes Send Stocks to New Highs: Stock Market TodayApple and Microsoft are on track to join Nvidia in the $4 trillion market cap club.
-
Dow Adds 472 Points After September CPI: Stock Market TodayIBM and Advanced Micro Devices created tailwinds for the main indexes after scoring a major quantum-computing win.
