In a notable downturn, US benchmark equity indexes experienced a decline on Wednesday as market participants scrutinized the latest batch of corporate earnings reports. The Nasdaq Composite fell by 1.1%, settling at 16,195.8, while the S&P 500 dropped by 0.8% to close at 5,199.5. The Dow Jones Industrial Average also faced challenges, losing 0.6% and ending at 38,763.5.
Among the various sectors, consumer discretionary faced the steepest decline, while utilities emerged as the leading gainers for the day. This recent downturn comes on the heels of a rebound seen on Tuesday, following a sharp two-day sell-off primarily triggered by a weaker-than-expected US jobs report, which has elevated recession fears among investors.
However, numerous analysts assert that concerns regarding an impending recession may be exaggerated. Oxford Economics highlighted in a note to clients on Wednesday: "We see equity volatility remaining elevated in the run-up to the US presidential election. Former President Donald Trump's win in 2016 sparked a significant equity rally; however, we anticipate more constrained upside if he is re-elected in November." The brokerage firm further elaborated that a Trump victory could position the financials sector as the relative winner in this scenario. In the bond markets, the US 10-year yield rose by 6.8 basis points to reach 3.96% on Wednesday, while the two-year rate saw a nominal gain of one basis point, settling at 3.99%. Turning to individual company news, shares of Super Micro Computer ($SMCI) plummeted by 20%, marking it as the worst performer on both the S&P 500 and the Nasdaq.
The company released its fiscal fourth-quarter earnings late on Tuesday, which came in below Wall Street's expectations. Furthermore, its board approved a 10-for-1 forward stock split, potentially diluting its stock price further in the immediate aftermath. Airbnb ($ABNB) also struggled, being the second-worst performer in the indexes, with a decline of 13%.
The vacation rental marketplace reported second-quarter earnings that fell significantly short of expectations, attributing the downturn to rising costs that bloated its operational base. On a positive note, Fortinet ($FTNT) experienced a surge of 25%, emerging as the best performer among both the S&P 500 and the Nasdaq.
The cybersecurity firm raised its 2024 financial outlook after exceeding expectations in its latest second-quarter report. Similarly, Axon Enterprise ($AXON) recorded an impressive rise, being the second top gainer on the S&P 500, gaining 18% after increasing its full-year revenue forecast following robust second-quarter results that surpassed market predictions. In commodity markets, West Texas Intermediate crude oil prices surged by 3%, climbing to $75.39 per barrel.
D.A. Davidson attributed this increase to ongoing concerns about supply sustainability. On the economic front, the volume of mortgage applications in the US rebounded to its highest level since January, recovering from two consecutive weeks of decline. This uptick is reportedly driven by heightened refinancing activity and lower interest rates across all loan categories, according to the Mortgage Bankers Association. Gold prices experienced a decrease of 0.3%, settling at $2,425.50 per troy ounce, while silver saw a drop of 1.7%, reaching $26.75 per ounce..