© Reuters. FILE PHOTO: Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., September 26, 2023. REUTERS/Brendan McDermid/File Photo
By Ankika Biswas and Shashwat Chauhan
(Reuters) – Wall Street’s main indexes fell on Wednesday as growing tensions in the Middle East dented risk sentiment, with investors also focused on earnings to gauge the impact of inflation and high interest rates on businesses.
U.S. President Joe Biden arrived in Israel, pledging solidarity in its war against Hamas and backing its account that a blast that killed huge numbers of Palestinians at a Gaza hospital appeared to have been caused not by Israel but by its foes.
Demand for safe-haven assets sent gold prices to a more than one-month high, up over 1%, while the U.S. dollar also strengthened.
“The war in Ukraine and the recent events in the Middle East are absolutely weighing on markets and any geopolitical issues and uncertainty will usually create a flight to safety for investments,” said Chris Giamo, head of commercial banking at TD Bank.
U.S. Treasury yields, however, rose after data showed U.S. single-family homebuilding rebounded sharply in September.
On the earnings front, Morgan Stanley’s third-quarter profit dropped less than expected as a strong performance in its wealth management division offset a hit from a lull in dealmaking. The company’s shares, however, fell 5.4%.
Abbott Laboratories (NYSE:) advanced 2.1% after beating third-quarter profit estimates on strong sales of devices, diagnostics products.
Consumer goods maker Procter & Gamble (NYSE:) gained 2.8% after its quarterly sales topped market expectations.
EV maker Tesla (NASDAQ:) and streaming services company Netflix (NASDAQ:) are scheduled to report quarterly results after market close. Their shares were down 0.8% and 1.0%, respectively.
“The macro environment of the economy is settling; we’re realizing we will likely be in this higher rate environment for a more prolonged period of time,” TD Bank’s Giamo added.
Several Federal Reserve officials, including New York’s John Williams and board governors Christopher Waller and Michelle Bowman will speak later in the day, ahead of Chair Jerome Powell’s remarks on Thursday.
Philadelphia Fed president Patrick Harker said in an interview to the Wall Street Journal that the U.S. central bank should extend its pause on interest-rate increases, while Minneapolis Fed President Neel Kashkari cautioned on Tuesday that inflation was “still too high”.
At 9:42 a.m. ET, the was down 87.17 points, or 0.26%, at 33,910.48, the was down 22.08 points, or 0.50%, at 4,351.12, and the was down 95.49 points, or 0.71%, at 13,438.25.
Materials and industrials led declines amongst the major S&P 500 sectors, while higher crude prices pushed energy stocks higher.
Nvidia (NASDAQ:) fell 2.7% following Tuesday’s 4.7% drop on lingering concerns over the Biden administration’s plans to halt shipments of more advanced AI chips designed by the company and others to China.
United Airlines Holdings (NASDAQ:) lost 7.2% after forecasting weaker fourth-quarter profit due to higher costs. Rivals American Airlines (NASDAQ:) and Delta Air Lines (NYSE:) also shed 3.9% and 4.2%, respectively.
Declining issues outnumbered advancers by a 3.70-to-1 ratio on the NYSE and by a 2.85-to-1 ratio on the Nasdaq.
The S&P index recorded nine new 52-week highs and 10 new lows, while the Nasdaq recorded 12 new highs and 72 new lows.
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