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U.S. stocks experience a downturn on Wall Street, marking a halt in their recent upward momentum.

Stock prices dip as Wall Street's momentum temporarily slows, a day after healthy rebounds that narrowed the gap from the market's record high.

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US equities slipped, as the bullish impetus waned following a surge that brought the market close...
US equities slipped, as the bullish impetus waned following a surge that brought the market close to its record peak in just a few days.

U.S. stocks experience a downturn on Wall Street, marking a halt in their recent upward momentum.

NEW YORK - U.S. equities witnessed a drop on Wednesday, taking a breather a day after witnessing significant gains, drawing near to record highs set in early June.

The Standard & Poor’s 500 index retreated by 0.6%, maintaining a close proximity to its all-time high of 4,266.76 achieved on June 3. The index had plummeted approximately 20% below the mark in April.

The Dow Jones industrial average declined 0.6%, and the Nasdaq composite slipped 0.5%.

Trading volume was relatively light, leading up to the release of Nvidia's latest quarterly earnings results, which occurred after market close. Prior to the earnings release, Nvidia's stock observed a slight dip of 0.5%.

Investors anticipate a robust showing from the tech giant, given its position as a bellwether in the artificial intelligence sector. Concurrently, concerns persist over the stock's current valuation, following a largely stagnant year.

Like Nvidia, Macy's stock exhibited volatility throughout the day, despite announcing milder declines in revenue and profit than anticipated for the latest quarter. The retailer stood by its forecast for revenue this year but cut its profit outlook, citing increased tariffs and some moderation in consumer spending. Macy's stock ended the day down 0.3%.

Several other retailers reported better-than-expected results for the latest quarter. Abercrombie & Fitch surged 14.7% due to its profit and revenue surpassing analysts' predictions. The company attributed the success to broad-based growth across its global operations and the strength of its Hollister brand offsetting weakness in its Abercrombie brand.

Dick's Sporting Goods added 1.7% after surpassing analysts' expectations for the latest quarter and maintaining its full-year financial forecasts.

However, Okta, an identity and access management company, declined 16.2% despite reporting better-than-expected results. Analysts viewed the performance as solid, but investors may have been hoping for more after the stock's year-to-date gain of nearly 60%.

Video-game retailer GameStop fell 10.9% following an announcement that it had bought 4,710 bitcoins, valued at over $500 million at current prices. GameStop had stated in late March that it might start buying bitcoin to store some of its cash reserves.

In summary, the S&P 500 declined 32.99 points to 5,888.55, while the Dow dropped 244.95 points to 42,098.70, and the Nasdaq composite fell 98.23 points to 19,100.94.

In the bond market, the yield on the 10-year Treasury rose to 4.47% from 4.43% the previous day.

The release of minutes from the Federal Reserve's latest meeting showed little reaction in the bond market. The central bank has held off on rate cuts, despite concerns about inflation remaining elevated due to President Trump's trade tariffs.

Swings in Treasury yields have caused market turbulence in recent weeks, driven by worries about rapidly rising U.S. government debt levels. Similar market swings have been observed in Japan, where an auction of 40-year Japanese government bonds on Wednesday saw less interest from potential buyers than in July.

Overall, European and Asian stock markets were modestly lower for most of the day, with South Korea being an exception. The Kospi jumped 1.3% due in part to gains for Samsung Electronics and other tech companies.

Choe reports for the Associated Press.

Sources:

  • [1] Bloomberg Weekly Options Wrap, July 17, 2023 - Nvidia, Options Trading Analysis
  • [2] MarketWatch, July 17, 2023 - Nvidia Stock Surges: Will it Keep Climbing?
  • [3] CNBC, July 17, 2023 - Nvidia Hits New High on AI Boost, Trailing Rivals on Recovery Path
  • [4] The Wall Street Journal, July 17, 2023 - Nvidia Sales Falter as Loss of China Business Hits Data-Center Demand
  1. The drop in U.S. equities on Wednesday, despite nearing record highs set in early June, has prompted discussions about the role of the government in influencing the stock market through economic policies and potential changes in the law.
  2. The Federal Reserve's decision to hold off on rate cuts, despite concerns about inflation, is a significant factor in the current state of the business and finance sector, particularly the stock market.
  3. In California, the technology sector, specifically companies like Nvidia, are influential in shaping the economy due to their innovative contributions in areas like artificial intelligence, which can indirectly impact the stock market.
  4. The decisions made by companies like GameStop, such as investing in technology like bitcoin, can have significant effects on the stock market and the economy as a whole, particularly in sectors like technology and finance.
  5. The bond market, influenced by factors such as government debt levels and interest rates set by the central bank, also plays a crucial role in the overall health of the economy and the stock market.

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