By Stephen Culp NEW YORK (Reuters) -U.S. stocks ended in negative territory on Thursday as investors, left with no economic data or any sentiment-swaying catalysts, took the opportunity to consolidate ahead of third-quarter earnings season. The S&P 500 and the Nasdaq eased back from Wednesday’s record closing highs, but the blue-chip Dow closed with the […]
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Wall Street closes lower, pausing record-setting rally as earnings approach
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By Stephen Culp
NEW YORK (Reuters) -U.S. stocks ended in negative territory on Thursday as investors, left with no economic data or any sentiment-swaying catalysts, took the opportunity to consolidate ahead of third-quarter earnings season.
The S&P 500 and the Nasdaq eased back from Wednesday’s record closing highs, but the blue-chip Dow closed with the deepest percentage decline.
“The earnings cycle is upon us and there’s a wait-and-see in terms of whether we’ll see the same level of consistency of earnings growth in the coming quarter that we’ve seen in the last two quarters,” said Matthew Keator, managing partner in the Keator Group, a wealth management firm in Lenox, Massachusetts. “Couple that with the uncertainty surrounding the lack of data coming out of Washington and how the Fed navigates that, it’s natural to see a bit of a pullback.”
The stock market’s pause comes amid a steep rally that has been largely driven by the rise of artificial intelligence technology. The runup has prompted concerns that a bubble is forming, which could be a harbinger of an impending correction.
Sunday will mark the current bull market’s third anniversary; the benchmark S&P 500 touched the nadir of its current market cycle on October 12, 2022 on the heels of monetary tightening from the Fed. Over that time period, while tech and tech-adjacent megastocks have driven the index nearly 90% higher, history suggests the current bull market has more gas in its tank.
The U.S. government shutdown entered its ninth day, with few signs of progress. Consequently, market participants continue to be deprived of essential economic data. And with the start of third-quarter earnings season just days away, the scarcity of market-moving catalysts is focusing investors’ attention on remarks from monetary policymakers for clues regarding the central bank’s rate cut intentions through the end of the year.
New York Federal Reserve President John Williams favors more interest rate reductions before year-end due to risks facing the weakening labor market, he said in an interview with the New York Times published on Thursday.
According to preliminary data, the S&P 500 lost 18.50 points, or 0.27%, to end at 6,735.22 points, while the Nasdaq Composite lost 18.75 points, or 0.08%, to 23,023.95. The Dow Jones Industrial Average fell 238.58 points, or 0.51%, to 46,363.20.
On Tuesday of next week, JPMorgan Chase, Goldman Sachs, Citigroup and Wells Fargo are slated to report quarterly results, marking the unofficial launch of third-quarter earnings season.
Analysts currently predict year-on-year S&P 500 earnings growth of 8.8% in the July-September period, weaker than the second quarter’s 13.8% and the year-ago quarter’s 9.1% annual growth, according to the most recent data from LSEG.
Delta Air Lines advanced after it provided an upbeat forecast for the current quarter, after posting stronger-than-expected third-quarter earnings.
Other U.S. carriers also gained, boosting the S&P 1500 Airlines index.
U.S. retailer Costco Wholesale rose after reporting September sales data.
Shares of Albemarle gained ground after brokerage TD Cowen raised its price target on the lithium producer and as China tightened export controls on rare earths.
(Reporting by Stephen Culp in New York; Additional reporting by Lewis Krauskopf in New York and Niket Nishant and Sukriti Gupta in Bengaluru; Editing by Matthew Lewis)