US equity indexes experienced a downturn from their recent record highs, primarily driven by declines in the energy and technology sectors following midday trading on Tuesday. The Nasdaq Composite Index saw a decrease of 0.8%, settling at 18,349.7. The S&P 500 index also dropped by 0.4%, reaching 5,835.2, while the Dow Jones Industrial Average was 0.3% lower at 42,944.2.
Notably, both the S&P 500 and the Dow had reached fresh record highs just the day before on Monday. On Tuesday, the energy and technology sectors faced the steepest declines intraday, in contrast to gains seen in real estate, financials, and utilities. West Texas Intermediate (WTI) crude oil prices fell sharply by 4.5%, closing at $70.53 per barrel, marking the lowest price point since early this month. Reports surfaced on Tuesday that Israeli Prime Minister Benjamin Netanyahu informed the Biden Administration about Israel's strategic focus on attacking Iranian military facilities in response to Iran’s recent aggression.
This announcement appeared to alleviate concerns that Israel’s actions might disrupt Iran’s oil exports, which total 1.7 million barrels per day, or provoke an escalation into a broader conflict in the Middle East. PVM Oil Associates commented, "The next moves will hinge on whether the market believes this new conciliatory political speak, and if it does and sees Israel behaving in accordance with it, this will not be the end of lower prices." In the meantime, the International Energy Agency (IEA) has once again revised its forecast for demand growth in 2024, as outlined in its October Oil Market Report.
The report anticipates demand will increase by 862,000 barrels per day above 2023 levels, down from the previously estimated growth of 903,000 barrels per day noted in September. However, the IEA slightly raised its demand growth projection for 2025 to one million barrels per day, warning that an increase in non-OPEC supply and weakening demand from China are likely to lead to rising inventories in the forthcoming year. The IEA report stated, "For now, supply keeps flowing, and in the absence of a major disruption, the market is faced with a sizeable surplus in the new year." In the realm of technology, discussions are reportedly ongoing within the Biden Administration regarding the possible imposition of export caps on advanced artificial intelligence chips produced by Nvidia and other US firms to select nations, as reported by Bloomberg.
Consequently, the PHLX Semiconductor Index (SOX) experienced an intraday drop of 4.6%. The CBOE Volatility Index, commonly referred to as the fear gauge for investors, rose 2.1% to a reading of 20.11, hinting at increasing market nervousness. In other corporate news, ASML Holding disclosed in its fiscal Q3 results an expectation for net sales between 30 billion euros and 35 billion euros by 2025, translating to approximately $32.75 billion to $39.25 billion.
Analysts from Capital IQ had anticipated sales averaging around 35.77 billion euros. In response, shares of the technology giant tumbled 17%, marking the most significant decline on the Nasdaq for the day. In another noteworthy development, UnitedHealth Group adjusted its full-year earnings forecast downward due to a larger-than-anticipated effect from business interruptions linked to a cybersecurity incident earlier this year.
Consequently, shares of UnitedHealth slumped 7% intraday, becoming the steepest decliner on the Dow. Conversely, Walgreens Boots Alliance saw its shares surge nearly 12% intraday, topping the S&P 500, following the company’s fiscal Q4 adjusted net earnings and sales that exceeded average analyst expectations compiled by Capital IQ.
The pharmaceutical giant also announced plans to close around 1,200 stores within the next three years, with approximately 500 closures expected in fiscal 2025. In the bond market, US Treasury yields exhibited mixed results during the trading session. The 10-year yield decreased by 2.8 basis points to 4.04%, while the two-year yield rose by 1.7 basis points to 3.96%. From an economic perspective, Redbook’s US same-store sales reported a year-on-year increase of 5.6% for the week ending October 12, outpacing the 5.4% growth recorded in the previous week. Meanwhile, gold prices increased by 0.4% to $2,676.70 per ounce, and silver prices saw a 1.2% rise to $31.71..