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Wall Street experienced a significant downturn as the Dow Industrials recorded its deepest drop of the year, driven by inflation fears and rising bond rates, with the 30-year Treasury yield hitting a 2007 high. Key economic data, including jobless claims, GDP, and PCE inflation, are highly anticipated. Major tech earnings from Amazon, Apple, and Coinbase are also on the horizon, following mixed after-hours results from Meta, Qualcomm, and Microsoft, alongside a robust report from Robinhood.
U.S. equity markets experienced a significant downturn, with the Dow Industrials recording its deepest drop of the year, plummeting over 1,100 points. This market tremor, according to CNBC’s Jim Cramer, stems primarily from escalating inflation fears and a surge in bond rates, notably the 30-year Treasury yield climbing above 5.2%—a level not seen since 2007.
On a challenging trading day, the Dow Industrials fell 2.19%, putting it 3.18% off its high from earlier this month. The S&P 500 declined 1.52%, now 4% below its June peak, while the Nasdaq Composite saw a 1.74% dip, marking a 10.1% retreat from its June high. The Russell 2000 also fell 1.6%, 4.6% off its July 1 high. Industrials were the hardest-hit sector, dropping 3.24%, though energy, consumer staples, and communications services managed to close in positive territory.
Bond market expert Jeffrey Gundlach of DoubleLine offered his perspective on CNBC, asserting that the Federal Reserve will struggle to achieve its 2% inflation target without further rate hikes, predicting it could take years. He also anticipates a weakening dollar. Treasury yields remain elevated, with the 30-year at 5.21%, the 10-year at 4.69%, and the 2-year at 4.26%.
Investors are keenly awaiting a flurry of economic data set for release. Thursday morning brings the latest jobless claims figures, with a Dow Jones consensus estimate of 200,000. Real GDP data is also expected, forecast to show a 1.8% rise. Critical inflation insights will come from the Personal Consumption Expenditures (PCE) price index data, with estimates calling for a month-to-month decline of 0.1% and a core increase of 0.2%, while year-over-year figures are projected at 3.7% for headline and 3.3% for core PCE.
Earnings season continues to drive market volatility. Hershey is due to report quarterly results, with its stock down nearly 3% in three months and cocoa prices soaring 80% since March 1. After the bell, tech giants Amazon, Apple, and Coinbase will release their reports. Amazon's stock is down 14% in three months, while Apple, which hit a new high today, is up 25% over the same period. Coinbase shares, however, are down 60% from their October high.
International central banks are also in focus, with the Bank of England and the Bank of Japan scheduled to announce their rate decisions. Meanwhile, Robinhood impressed with strong earnings, propelled by growth in options trading, crypto volume, and its move into prediction markets. The company's CFO, Shiv Verma, noted the business is “firing on all cylinders,” though the stock saw a 4% dip in after-hours trading despite a 40% surge since April.
Wednesday evening’s after-hours trading saw mixed results from other major players. Meta Platforms dropped 7% after issuing disappointing guidance, while Qualcomm also fell nearly 4% as its forward guidance missed Wall Street's expectations. In contrast, Microsoft climbed 8% after beating results, driven by strong performance in its Azure cloud and AI divisions.
