Topline
A rare down week for the stock market got dimmer Wednesday, as an $11 billion hamburger selloff and big-ticket losses for big technology stocks pushed U.S. equity indexes to their worst day in six weeks.
Traders work on the floor of the New York Stock Exchange on Tuesday.
Key Facts
By mid-afternoon, the leading S&P 500 fell 1.2%, the tech-heavy Nasdaq lost 2% and the blue chip Dow Jones Industrial Average declined 1.2%, or 500 points.
All three indexes are on track for their worst daily declines since the first week of September and for their lowest close in two weeks.
Contributing most to the share price-weighted Dow’s dip was McDonald’s, as its stock’s 5% ($15 per share) loss Wednesday has shares of the restaurant chain on pace for their worst day since March 2020 as investors reacted to news of an E. Coli outbreak tied to its Quarter Pounder hamburger.
The market capitalization-weighted Nasdaq and S&P were dragged down by big tech, as the “magnificent seven” group including the U.S.’ only six trillion-dollar companies and Tesla fell shed a combined $430 billion in Wednesday trading.
Each of the magnificent seven stocks dropped at least 0.9%: Apple, Amazon, Facebook parent Meta and Nvidia shares fell about 3% apiece, Google parent Alphabet and Tesla declined 2% and Microsoft dipped almost 1%.
Why Are Stocks Down Today?
In addition to isolated catalysts like the McDonald’s foodborne illness agita and an analyst report pointing to lighter-than-hoped sales for Apple’s iPhone 16, there was a familiar foe behind much of the losses: climbing Treasury yields. The benchmark 10-year U.S. Treasury note rose Wednesday to a 3-month high of over 4.25%. The increase comes amid fresh worries about what next month’s election will mean for the U.S’ surging national debt and declining expectations for further interest rate cuts from the Federal Reserve in the wake of inflation concerns and solid economic growth data. Higher yields on government bonds often lead to pricier corporate borrowing, eating into profit margins, and big tech companies are typically seen as one of the groups most directly hurt by higher yields as future profits are discounted in valuation models.
Contra
Even with the S&P well on its way to its first three-day losing streak since the first week of September, the baseline U.S. index is still just 1.6% below its all-time closing high set Friday. The S&P remains up 21% this year, excluding dividends, and it has climbed 0.2% in October after posting its best opening nine months since 1997.
What To Watch For
Tesla will report third-quarter earnings after the bell Wednesday, kicking off big tech earnings season.
