By Lisa Pauline Mattackal, Purvi Agarwal and Carolina Mandl
(Reuters) -Wall Street closed lower on Wednesday as rising Treasury yields pressured mega-cap stocks and investors lost confidence in steep rate cuts from the Federal Reserve, while corporate news McDonald’s (NYSE:) and Coca-Cola (NYSE:) ) put pressure on.
Ten-year U.S. Treasury yields hit a three-month high, with investors reassessing the prospects for a Fed rate cut in coming months against the backdrop of strong economic data and the upcoming presidential election.
“The market is struggling to digest this latest backup in returns,” said Adam Turnquist, chief technical strategist at LPL Financial (NASDAQ:), adding that higher rates are putting pressure on stocks.
Among price-sensitive megacaps, Nvidia (NASDAQ:) fell 2.81%, Apple (NASDAQ:) fell 2.16%, Meta Platforms (NASDAQ:) fell 3.15% and Amazon (NASDAQ:) fell 2.63% , leaving the tech-laden Nasdaq behind.
Of the eleven S&P subsectors, only utilities and real estate posted gains.
They fell 409.94 points, or 0.96%, to 42,514.95, lost 53.78 points, or 0.92%, to 5,797.42 and lost 296.47 points, or 1.60%, to 18,276.65.
McDonald’s plunged 5.12% after an E. coli infection linked to its Quarter Pounder burgers killed one and sickened many. Coca-Cola fell 2.07% after the company reiterated its annual profit growth forecast even as it expected higher sales.
The broader consumer discretionary sector also fell 1.82%, while information technology fell 1.68%.
“You have a market that has reached new all-time highs, so portfolio managers are looking around and saying, maybe I should take some profits,” said Thomas Martin, senior portfolio manager at Globalt Investments.
Boeing (NYSE:) fell 1.76% after the plane maker reported a quarterly loss of $6 billion due to a crippling strike. Factory workers at Boeing will vote later in the day on a new contract proposal that could end the impasse after more than five weeks.
Semiconductor company Texas Instruments (NASDAQ:) rose 4% after beating third-quarter earnings estimates, while AT&T (NYSE:) rose 4.60% after adding more wireless subscribers than expected in the third quarter.
Tesla (NASDAQ:), the first of the so-called Magnificent Seven companies scheduled to report results after the market close, closed its doors but gained 8% in after-hours trading as it beats profit margins.
The benchmark S&P 500 suffered its third consecutive daily decline.
U.S. markets are at near record highs, but a combination of earnings data, changing monetary policy prospects and the upcoming presidential election will test the rally and could fuel volatility, analysts said.
Richmond Fed President Thomas Barkin said the central bank’s battle to return inflation to its 2% target could take longer than expected, limiting interest rate cuts.
The Fed’s “Beige Book” survey found that U.S. economic activity was little changed between September and early October, while companies saw a jump in hiring.
On the NYSE, decliners outnumbered advancers by a ratio of 3.27 to 1. There were 102 new highs and 59 new lows on the NYSE.
The S&P 500 posted 28 new 52-week highs and 4 new lows, while the Nasdaq Composite posted 60 new highs and 90 new lows.
Volume on U.S. exchanges was 11.83 billion shares, compared to the full-session average of 11.29 billion over the past 20 trading days.
