U.S. Stocks Move Sharply Lower, Nasdaq Tumbles To Five-Month Closing Low

(RTTNews) - Stocks managed to finish Tuesday's session mostly higher but showed a substantial move back to the downside during trading on Wednesday. The tech-heavy Nasdaq led the pullback, plunging to a five-month closing low.

The Nasdaq tumbled 318.65 points or 2.4 percent to 12,821.22, reflecting its worst day since February. The S&P 500 also slumped 60.91 points or 1.4 percent to 4,186.77, its lowest closing level in almost five months, while the narrower Dow fell 105.45 points or 0.3 percent to 33,035.93.

The particularly steep drop by the Nasdaq partly reflected a negative reaction to quarterly results from Alphabet (GOOGL), with the Google parent plummeted by 9.5 percent.

Shares of Google came under pressure after the company reported third quarter earnings that exceeded estimates but weaker than expected revenue from its cloud business.

A renewed increase by treasury yields also weighed on the markets, with the yield on the benchmark ten-year note spiking after ending the previous session little changed.

The surge by yields came as traders looked ahead to the release of key economic data in the coming days, including a preliminary reading on third quarter GDP due to be released on Thursday.

Economists expect the pace of GDP to show a significant acceleration to 4.2 percent in the third quarter from 2.1 percent in the second quarter.

Reports on weekly jobless claims, durable goods orders and pending home sales may also attract attention on Thursday, as traders look for additional clues about the outlook for interest rates.

On Friday, the Commerce Department is due to release a report on personal income and spending that includes readings on inflation said to be preferred by the Federal Reserve

Meanwhile, strong gain by Microsoft (MSFT) helped limit the downside for the Dow, with the software giant jumping by 3.1 percent after reporting better than expected fiscal first quarter results.

Sector News

Semiconductor stocks saw substantial weakness on the day, dragging the Philadelphia Semiconductor Index down by 4.1 percent to a five-month closing low.

Chipmaker Texas Instruments (TXN) posted a steep loss after reporting mixed third quarter results and providing disappointing fourth quarter guidance.

Considerable weakness was also visible among transportation stocks, with the Dow Jones Transportation Average tumbling by 2.4 percent. The average also fell to its lower closing level in almost five months.

Retail stocks also showed a significant move to the downside, resulting in a 2.4 percent slump by the Dow Jones U.S. Retail Index.

Biotechnology, commercial real estate and networking stocks also showed notable moves to the downside amid broad based weakness on Wall Street

Other Markets

In overseas trading, stock markets across the Asia-Pacific region moved mostly higher during trading on Wednesday. Japan's Nikkei 225 Index advanced by 0.7 percent, while China's Shanghai Composite Index climbed by 0.4 percent.

The major European markets also showed modest moves to the upside on the day. While the German DAX Index inched up by 0.1 percent, the French CAC 40 Index and the U.K.'s FTSE 100 Index both rose by 0.3 percent.

In the bond market, treasuries moved sharply lower over the course of the session. As a result, the yield on the benchmark ten-year note, which moves opposite of its price, surged 11.3 basis points to 4.593 percent.

Looking Ahead

Trading on Thursday may be impacted by reaction to a slew of U.S. economic data, including a preliminary reading on third quarter GDP as well as reports on weekly jobless claims, durable goods orders and pending home sales.

On the earnings front, IBM Corp. (IBM) and Facebook parent Meta Platforms (META) are among the companies releasing their quarterly results after the close of today's trading.

Comcast (CMCSA), Honeywell (HON), Merck (MRK), and UPS (UPS) are also among the companies due to report their quarterly results before the start of trading on Thursday.