On Wednesday, US benchmark equity indexes saw declines, with the Dow Jones Industrial Average and the S&P 500 pulling back from their record highs achieved in the previous session as markets responded to new economic data. The Nasdaq Composite fell 0.6%, closing at 19,060.5, while the S&P 500 decreased by 0.4% to finish at 5,998.7.
The Dow dropped 0.3%, ending the day at 44,722.1. The technology sector experienced the most significant losses, whereas real estate assets emerged as the leading gainers. With markets set to close on Thursday in observance of the Thanksgiving holiday, investors are closely monitoring the implications of recent economic indicators. In recent economic updates, growth in US consumer spending slowed as anticipated during October.
Meanwhile, the Federal Reserve's preferred inflation measure showed an increase on a yearly basis, illustrating ongoing economic dynamics. As noted in a report by TD Economics, 'Today's report underscores the ongoing resilience of US consumers with a large income gain and solid consumer spending in October.' However, it also pointed out that 'inflation has remained firm, chipping away at the real gains.' Market perceptions regarding potential interest rate cuts have shifted, with the probability of the Federal Open Market Committee reducing its benchmark lending rate by 25 basis points next month now standing at 67%, up from 59% the previous day, based on insights from the CME FedWatch tool.
Concurrently, expectations for rates remaining unchanged dropped from 41% to 33%. US economic growth for the third quarter remained stable, initially projected at 2.8%. However, consumer spending faced an unexpected downward revision according to a secondary estimate provided by the Bureau of Economic Analysis.
On a more encouraging note, pending home sales in the US saw an unexpected increase on a sequential basis in October, reflecting growth across all regions as reported by the National Association of Realtors. Lawrence Yun, NAR Chief Economist, stated, 'Home-buying momentum is building after nearly two years of suppressed home sales.' In other economic developments, US durable goods orders increased less than expected in October, despite a rebound in transportation equipment.
As for bond yields, the US 10-year yield decreased by 4.8 basis points to 4.25%, while the two-year rate fell by 2.9 basis points to 4.23%. Turning to company-specific news, shares of Dell Technologies ($DELL) suffered a 12% decline, marking the most significant drop on the S&P 500. The company revealed weaker-than-expected revenue performance for its fiscal third quarter, particularly affected by setbacks in its client solutions division.
Morgan Stanley expressed that this performance outlook has unsettled investors. Autodesk ($ADSK), facing challenges as well, was the worst performer on the Nasdaq and among the S&P 500, dropping 8.6% despite reporting better-than-expected fiscal third-quarter results and appointing Janesh Moorjani as chief financial officer. Meanwhile, Walt Disney ($DIS) has reached a settlement agreement to pay $43.3 million related to allegations that its female employees in California were underpaid compared to male counterparts, with total claims hitting $150 million over an eight-year span.
Following this development, Disney shares rose 1.9%, making it the top gainer on the Dow. In the commodities sector, West Texas Intermediate crude oil held steady at $68.78 a barrel. 'Israel and Hezbollah announced a 60-day ceasefire agreement and plans to discuss a longer-lasting peace agreement,' noted ING Bank in a Wednesday communication.
'The oil market is assessing the new dynamics and how it impacts the other ongoing conflicts in the region.' Investors are also anticipating this weekend’s meeting of the Organization of the Petroleum Exporting Countries and allies to determine any production adjustments. As reported, commercial crude stocks in the US decreased more than projected last week. Precious metals saw fluctuations with gold rising by 0.6% to $2,636.90 per troy ounce, whereas silver dipped by 0.9% to $30.13 per ounce..