US stocks retreated on Wednesday as investors digested a fresh wave of earnings, led by Tesla and IBM, while crypto and gold continued to struggle amid a broad unwind of momentum trades. The Dow Jones Industrial Average fell 0.7%, shedding over 300 points, the S&P 500 dropped roughly 0.5%, and the tech-heavy Nasdaq Composite led losses with a 1% decline.
Gold rebounded slightly after Tuesday’s steepest one-day drop in over a decade, while bitcoin slipped below $110,000. Investors are reassessing risk after a strong start to third-quarter earnings, with the first round of megacap tech results—dubbed the “Magnificent Seven”, set to test the resilience of the recent market rally.
Netflix shares tumbled roughly 10% after missing earnings expectations, affected in part by a Brazil tax dispute, while Mattel retreated after weaker-than-expected North American sales. Tesla shares dipped over 1% ahead of its third-quarter report, which later revealed a profit of $0.50 per share, slightly below analyst estimates of $0.54. Revenue surged to a record $28.1 billion, exceeding forecasts, and free cash flow came in at $3.99 billion, far above the expected $1.25 billion.
Trade developments remain in focus. President Trump hinted at potential restrictions on US software exports to China, while the US and India are reportedly close to a deal reducing Indian tariffs from 50% to as low as 15%.
The US government shutdown continues to restrict official economic releases, leaving markets reliant on corporate earnings and geopolitical developments. Investors now look toward Friday’s September Consumer Price Index report, which could heavily influence expectations ahead of next week’s Federal Reserve meeting, where a 25 basis point rate cut is widely anticipated.
Geopolitical tensions also continue to shape markets. Trump imposed sanctions on two major Russian oil companies, helping support oil prices, with WTI holding $58 and testing $60.80. Gold remains underpinned near $4,150, supported by China buying, geopolitical uncertainty, and limited alternatives, despite bouts of profit-taking.
Currency markets saw USD demand remain generally supportive, while risk-on JPY flows were notable. US futures rose slightly early Thursday, reflecting tentative optimism despite trade-war worries and ongoing shutdown-related uncertainty.
Today’s data slate remains light, with Canadian Retail Sales, ECB’s Lane, BOE’s Dhingra, and Fed officials Bowman and Barr scheduled to speak.
