FX168 Financial News Agency (North America) News On Wednesday, October 23, the U.S. stock market plunged sharply as U.S. Treasury yields rose, market sentiment was under pressure, and the Dow Jones Industrial Average plummeted nearly 400 points, marking the largest single-day drop in over a month. At the same time, a batch of important company earnings reports will be released successively. The market continues to focus on the U.S. election and the prospect of the Federal Reserve cutting interest rates.

The Dow Jones fell 409.94 points, a decrease of 0.96%, to 42,514.95 points; the Nasdaq fell 296.47 points, a decrease of 1.60%, to 18,276.65 points; the S&P 500 index fell 53.78 points, a decrease of 0.92%, to 5,797.41 points.

(Image Source: FX168)

(Image Source: FX168)

Both the Dow Jones and the S&P 500 index fell for the third consecutive trading day.

The yield on the benchmark 10-year U.S. Treasury bonds broke through 4.25% intraday, reaching the highest level since July 26.

In the past month, the yield on US Treasuries has been soaring, even though the Fed started cutting rates in September. Some people believe that recent economic data is the reason for the rise in yields, while others point out that if Donald Trump serves as president again, the US fiscal deficit may increase.

"For me, everything is related to the impact of rate hikes. The market is reassessing the possibility of a significant rate cut by the Fed," said Brent Schutte, Chief Investment Strategist at Northwestern Mutual Wealth Management. "Some parts of the economy have not yet felt the impact of rate hikes, but the longer interest rates remain high, the more different parts of the economy need to be repriced to adapt to this reality... The economy is already out of balance."

Schutte stated that the most overvalued part of the US stock market is large-cap stocks, and added that due to ongoing risks of an economic recession, he believes the market will have a short-term pullback.

The Fed's Beige Book shows that inflation continues to slow, reinforcing expectations for a 25 basis point rate cut at the next Fed meeting.

The Beige Book released by the Fed shows that inflation continues to moderate. According to the report, sales prices in most regions are increasing at a light or moderate pace. However, some food items such as eggs and dairy products have seen larger price increases. House prices have risen slightly in many regions, while rents have remained stable or slightly declined. Many regions have noticed an increase in consumer sensitivity to prices. Input prices have risen moderately overall. Respondents from multiple industries have pointed out that the pressure from rising insurance and medical costs has become more severe. Several regions reported that input prices are rising faster than sales prices, compressing companies' profit margins.

Some analysts say that the Fed's Beige Book survey shows little change in US economic activity from September to early October, with increased hiring by businesses continuing the recent trend and reinforcing expectations of a 25 basis point rate cut by the Fed within two weeks. In addition, the latest survey by the Fed on the health of the economy also indicates continued easing of inflation pressures. Economic issues, especially inflation, remain a key concern for voters ahead of the November 5th US presidential election.

Focus stocks

Due to an E. coli outbreak linked to its signature products, McDonald's stock price plummeted by over 5%. On Tuesday, local time, the Centers for Disease Control and Prevention (CDC) in the US issued a statement warning that McDonald's 'Quarter Pounder' burgers have caused E. coli-related illnesses in multiple states. On that day, the CDC reported that 49 people in the US have fallen ill after consuming 'Quarter Pounder' burgers, with 10 hospitalized and one death. Currently, the CDC is investigating the matter. The CDC also mentioned that these patients reported dining at McDonald's before falling ill, specifically noting the consumption of 'Quarter Pounder' burgers.

Tesla released its third quarter financial report, with profits exceeding expectations, although revenue slightly below expectations. Its stock price surged nearly 10% in post-market trading on the US stock market.

Tesla's third-quarter financial report shows revenue of $25.18 billion, analysts expected $25.43 billion, compared to $23.35 billion in the same period last year; adjusted earnings per share for the third quarter were $0.72, analysts expected $0.60; third-quarter gross margin was 19.8%, analysts expected 16.8%; third-quarter operating profit was $2.72 billion, analysts expected $1.96 billion; third-quarter $2.74 billion, analysts expected $1.61 billion.free cash flow2.74 billion USD, analysts expected 1.61 billion USD.