**Three major stock indices retreat, Nasdaq down 1.6%;
**Benchmark 10-year U.S. Treasury yields hit three-month high;
**McDonald's falls over 5% due to E. coli spread in hamburgers;
On Wednesday, Wall Street's main indices declined as U.S. Treasury yields continued to dampen market sentiment, with investors digesting corporate earnings reports. By the close, the Dow Jones Industrial Average (DJIA) fell 409.94 points, or 0.96%, to 42,514.95 points, marking its worst performance since September. The Nasdaq Composite Index dropped 1.60% to 18,276.65 points, and the S&P 500 Index fell 0.92% to 5,797.42 points.
Tesla's Profit Margin Exceeds Expectations
After the market closed, Tesla reported its third-quarter results, with revenue of $25.18 billion, an 8% increase year-over-year, versus market expectations of $25.37 billion. Earnings per share (EPS) were 72 cents, versus market expectations of 58 cents.
Breaking it down by segment, automotive revenue increased by 2% from $19.63 billion in the same period last year to $20 billion. Energy production and storage revenue soared by 52% to $2.38 billion, while service and other revenue grew by 29% to $2.79 billion.
The third-quarter profit margin was 19.6%, better than the market's expected 17.3%. Tesla stated that the labor and material costs for manufacturing vehicles, or the cost of goods sold per vehicle, dropped to the lowest level in history, at approximately $35,100. Tesla reported third-quarter vehicle deliveries of 462,890 units, a 6% increase year-over-year, setting a new record, with production at 469,796 units.
Earlier this month, Tesla launched a self-driving taxi service called Cybercab and a self-driving van to accelerate the development of autonomous technologies, including the Optimus humanoid robot. "Despite ongoing macroeconomic headwinds, we remain focused on expanding our automotive and energy product lineup, reducing costs, and making key investments in artificial intelligence projects and production capacity," the earnings statement said. Boosted by the results, the company's stock price once surged by over 8% after hours.
Market OverviewThe National Association of Realtors in the United States stated on Wednesday that, influenced by the rebound in mortgage interest rates, existing home sales in September fell by 1.0% to an annualized rate of 3.84 million units after seasonal adjustment, marking the lowest level since October 2010. Freddie Mac reported that the average interest rate for a 30-year fixed mortgage last week was 6.44%, higher than the average of 6.08% at the end of September.
The President of the Federal Reserve Bank of Richmond, Thomas Barkin, indicated that it might take longer than anticipated for the Federal Reserve to restore the inflation rate to its 2% target.
The Federal Reserve released its Beige Book on economic conditions, with nine out of twelve regions reporting stable or declining activity. Employment numbers slightly increased, layoffs remained limited, and wages continued to rise at a moderate pace. Surveys revealed that inflation continued to cool in most regions. Business contacts maintained an optimistic outlook on the economic future, albeit with caution in hiring and investment decisions.
Nationwide's Chief Economist, Kathy Bostjancic, stated: "Compared to the strong employment and retail sales reports in September, the anecdotal data in the Federal Reserve's Beige Book shows minimal economic growth in most parts of the country. Given Powell's indication that Federal Reserve officials are increasingly focusing on the Beige Book and other data, this provides a rationale for the Federal Reserve to continue easing monetary policy."
U.S. Treasury yields fluctuated upwards, with the benchmark 10-year U.S. Treasury rising to 4.25%, reaching a new high since July.
Northwestern Mutual Wealth Management's Chief Investment Officer, Brent Schutte, said: "For me, it's all about the impact of U.S. Treasury yields. The market is repricing the likelihood of substantial rate cuts by the Federal Reserve. Some parts of the economy have not yet felt the effects of rising interest rates, but the longer rates remain at higher levels, the more different parts of the economy will need to reprice based on this reality... The economy is already out of balance."
In terms of individual stocks, star tech stocks performed poorly, with Meta down by 3.2%, and Amazon, Nvidia, and Apple falling by more than 2%.
Coca-Cola's stock price fell by 2.7% after the company reiterated its annual profit growth forecast, despite expecting an increase in revenue.
Boeing fell by 1.7%, with the company suffering a $6 billion quarterly loss due to a severe strike. Factory workers will vote later in the day on a new contract proposal that could end the current deadlock.
McDonald's fell by 5.1%. The U.S. Centers for Disease Control and Prevention (CDC) announced on Tuesday evening that an E. coli outbreak linked to the fast-food giant's hamburgers has resulted in multiple hospitalizations.Qualcomm fell by 3.8% following reports that Arm Holdings canceled Qualcomm's license to use intellectual property for designing chips.
The NASDAQ Golden Dragon China Index dropped by 1.2%.
International oil prices declined, with U.S. crude oil inventories increasing by more than 5 million barrels last week. The near-month contract for WTI crude oil fell by 1.35%, trading at $70.77 per barrel, while the near-month contract for Brent crude oil fell by 1.42%, trading at $74.96 per barrel.
As the U.S. Dollar Index surged, international gold prices retreated from historical highs. The COMEX gold futures contract for delivery in October at the New York Commodity Exchange fell by 1.09%, trading at $2,714.40 per ounce.