NEW YORK: Wall Street stocks dropped on Wednesday (Feb 8) on concern about the deteriorating corporate earnings outlook amid worries the Federal Reserve (Fed) will overdo its effort to counter inflation.
“There’s a fear that they’re going to keep rates too high for too long,” Jack Ablin of Cresset Capital said of Wednesday’s downcast session in which equities traded in the red.
Briefing.com analyst Patrick O’Hare noted that the 12-month forecast for corporate earnings has fallen since analysts’ estimates at the end of 2022.
The market “has gone a long way in a short amount of time, leaving it ripe for some profit-taking interest”, he said. “While the stock market has been trending higher since the start of the year, earnings estimates have been trending lower.”
The Dow Jones Industrial Average fell 207.68 points, or 0.61%, to 33,949.01, the S&P 500 lost 46.14 points, or 1.11%, to 4,117.86 and the Nasdaq Composite dropped 203.27 points, or 1.68%, to 11,910.52.
Alphabet Inc was the biggest drag on the S&P 500 and Nasdaq. Its shares sank 7.7% after its new AI chatbot Bard delivered an incorrect answer in an online advertisement. The Nasdaq remains up about 14% for the year to date.
Uber Technologies jumped 5.5% after reporting better-than-expected profit on strong demand for its ride-hailing services.
After the closing bell, shares of entertainment company Walt Disney were up 1.6% following the release of its quarterly results. The stock ended the regular session up 0.1%.
Investors also were digesting comments from President Joe Biden’s State of the Union address late Tuesday, when he supported calls to tax corporate share buybacks. – AFP, Reuters