US benchmark equity markets declined on Wednesday, as Treasury yields increased amid an uncertain outlook for Federal Reserve rate cuts.
The Dow Jones Industrial Average had fallen by 1.4% at the time this article was written. For the third consecutive session, the Dow Jones Industrial Average fell more than 600 points.
The S&P 500 Index fell 1.5% while the Nasdaq Composite dropped more than 420 point.
In the early part of the session, 10-year Treasury notes yields topped 4.25 percent, their highest since the 26th July.
Strong economic data drives yields up
The rise in Treasury yields is fueled by the strong economic data coming out of the US.
US economic growth continues to be resilient. This dampens hopes for a bigger Fed rate reduction in November.
The impact of increased rates is what I’m concerned about. Brent Schutte is chief investment officer of Northwestern Mutual Wealth Management and told CNBC that markets are pricing in the possibility that the Fed will aggressively reduce rates.
Schutte, speaking to CNBC, said that “some parts of our economy may not have felt the effects of higher interest rates, but as long as rates are high, more parts will have to adjust to this reality…our economy is out-of-equilibrium.”
Coca Cola shares and Tesla share prices fall
The shares of Coca Cola dropped about 2% Wednesday, despite the fact that its third quarter earnings exceeded expectations.
Tesla shares have also fallen more than 1.5%, as the company will release its earnings for the third quarter after Wednesday’s closing bell.
McDonald’s shares drop after E. coli outbreak
McDonald’s shares are on course for their worst day since March 2021 as it scrambles in an attempt to contain the impact of an E. coli infection.
According to a Reuters article, the outbreak associated with Quarter Pounder burgers caused one death and nearly 50 illnesses in various US states.
According to the US Centers for Disease Control and Prevention, more than ten states in America have also been affected by this outbreak, and 10 people were hospitalized due to severe illness.
Reuters reports that the CDC is working with McDonald’s to examine the slivered onion and Quarter Pounder patties in order to determine the source of the E. coli infection.
McDonald’s Corp shares were nearly 5% lower at the time this article was written.
Boeing shares slip, while Walmart’s share price rises
Walmart shares rose by almost 1% to a new all-time record high.
CNBC reports that Walmart shares have outpaced S&P 500 in 2024. They are up 57%, compared with the index’s 22% increase this year.
Boeing’s stock fell nearly 3% in the meantime, after it reported its biggest quarterly loss since 2020.
In the third quarter of 2010, Boeing reported losses in excess of $6 billion, and more than $400 billion for its commercial aircraft division.
Starbucks shares fell by 1% in the meantime after it reported results for its fourth quarter.
Due to a weakening demand in the US, there was a decline in sales at same stores and in net revenue as well as profit.
As new information becomes available, this post Dow Jones drops for third consecutive day; McDonald’s and Tesla fall off the charts while Walmart sets a record may be updated.
