S&P 500 and Nasdaq post losses as major stocks like Apple and McDonald's face pressure amid higher rates
On Wednesday, stocks dropped sharply, with the Dow Jones Industrial Average seeing its worst day in more than a month, as rising Treasury yields affected market sentiment.
According to CNBC, the S&P 500 fell by 0.92 percent, closing at 5,797.42, while the Dow lost 409.94 points, or 0.96 percent, ending the session at 42,514.95, marking its worst performance since early September.
The Nasdaq Composite also declined, dropping 1.6 percent to 18,276.65. This marked the third consecutive losing session for both the Dow and the S&P 500.
The 10-year Treasury yield reached 4.25 percent during the session, its highest level since July 26. Treasury yields have been steadily increasing over the past month, even after the Federal Reserve started cutting interest rates in September.
Some analysts attribute the rise to recent economic data, while others point to concerns over growing fiscal deficits in the US under a potential second Donald Trump presidency.
Brent Schutte, chief investment officer at Northwestern Mutual Wealth Management, remarked, “To me, it’s all about the impact of higher rates. The market is repricing the probability that the Fed can aggressively cut rates.”
Schutte noted that certain sectors of the economy have not yet fully felt the effects of rising interest rates, but as rates stay elevated, more parts of the economy will need to adjust. “The economy is out of equilibrium,” Schutte added.
Schutte also pointed out that large-cap stocks are currently the most overvalued in the US equity market, and he expects a market pullback as recession risks continue.
Several major companies faced pressure on Wednesday. Apple and Nvidia shares fell more than 2 percent, while Meta Platforms saw a 3 percent drop. Netflix and Amazon also declined by approximately 2 percent.
Additionally, McDonald's saw its shares fall by more than 5 percent.
The Centers for Disease Control and Prevention reported on Tuesday that an E. coli outbreak linked to McDonald's Quarter Pounder burgers resulted in 10 hospitalizations and one death.
