The U.S. stock market began Wednesday’s session with a downward trend, affected by the rise in 10-year Treasury bond yields, which reached levels not seen in months.
This surge is due to better-than-expected economic data, which has raised expectations that the Federal Reserve will adopt a more cautious stance regarding interest rate cuts in the short term.
Investors are closely watching statements from several Fed members, looking for clues about the path monetary policy might take. Despite expectations of rate cuts in 2024, the 10-year Treasury bond yield rose to 4.23%, adding pressure to risk assets. This dynamic is questioning the sustainability of the recent stock market rally.
Regarding corporate earnings, the third-quarter reporting season continues to deliver mixed signals. Companies like Philip Morris and General Motors surprised positively by exceeding market expectations, with gains of +10% and +9%, respectively.
However, other companies faced difficulties. McDonald’s shares fell more than 5% after an E. coli outbreak linked to its Quarter Pounder burgers, which resulted in several hospitalizations and one death.
Meanwhile, Starbucks and Coca-Cola also posted losses during the session due to disappointing financial results.In the tech sector, Qualcomm experienced a significant decline after reports that Arm may cancel a key license, adding further uncertainty to a sector already affected by valuation re-assessments.
Nasdaq futures fell by approximately -0.6%, reflecting uncertainty over Treasury yields and the possibility of a less aggressive Federal Reserve in rate cuts. By Tuesday’s close, Wall Street’s major indexes showed little change, in a transition day before the publication of the Fed’s Beige Book, which could provide an update on U.S. economic conditions.
