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(Reuters) -Wall Street’s main indexes fell on Wednesday as growing tensions in the Middle East dented risk sentiment, with investors also focused on earnings to gauge the impact of inflation and high interest rates on businesses.
U.S. President Joe Biden pledged solidarity with Israel, at what became the only stop of a Middle East mission derailed by a massive explosion at a Gaza hospital, which Biden said appeared to have been caused by Israel’s foes.
Demand for safe-haven assets sent gold prices to a more than two-month high, up over 1%, while the U.S. dollar also strengthened.
“Gold has been holding with safe haven demand and even though Treasuries aren’t doing the greatest, the dollar has been faring fairly well with the increased tensions over there,” said Brian Jacobsen, chief economist at Annex Wealth Management.
Long-dated Treasury yields hit multi-year highs after a sharp rebound in U.S. homebuilding added to earlier data pointing to a resilient economy, fueling concerns the Federal Reserve would not cut rates anytime soon.
“The macro environment of the economy is settling; we’re realizing we will likely be in this higher rate environment for a more prolonged period of time,” said Chris Giamo, head of commercial banking at TD Bank.
Stronger crude prices pushed energy stocks 1% higher, while industrials and materials led the decline in major S&P 500 sectors.
On the earnings front, Morgan Stanley’s third-quarter profit dropped less than expected as a strong performance in its wealth management division offset a hit from a lull in dealmaking. The company’s shares, however, fell 7.6% to a more than one-year low.
Abbott Laboratories (NYSE:ABT) advanced 2.8% after beating third-quarter profit estimates on strong sales of devices, diagnostics products.
Consumer goods maker Procter & Gamble (NYSE:PG) gained 2.1% after its quarterly sales topped market expectations.
EV maker Tesla (NASDAQ:TSLA) and streaming services company Netflix (NASDAQ:NFLX) are scheduled to report quarterly results after market close. Their shares were down 2.7% and 1.6%, respectively.
Several Fed officials, including New York’s John Williams and board governors Christopher Waller and Michelle Bowman will speak later in the day, ahead of Chair Jerome Powell’s remarks on Thursday.
Philadelphia Fed president Patrick Harker said in an interview to the Wall Street Journal that the central bank should extend its pause on rate increases.
At 11:29 a.m. ET, the Dow Jones Industrial Average was down 169.41 points, or 0.50%, at 33,828.24, the S&P 500 was down 32.23 points, or 0.74%, at 4,340.97, and the Nasdaq Composite was down 118.95 points, or 0.88%, at 13,414.80.
Nvidia (NASDAQ:NVDA) fell 3.6% following Tuesday’s 4.7% drop on lingering concerns over the Biden administration’s plans to halt shipments of more advanced AI chips designed by the company and others to China.
United Airlines Holdings (NASDAQ:UAL) lost 8.3% after forecasting weaker fourth-quarter profit due to higher costs. The S&P 500 passenger airlines index dropped 4.8% to hit a more than one-year low.
Declining issues outnumbered advancers by a 3.90-to-1 ratio on the NYSE and by a 2.69-to-1 ratio on the Nasdaq.
The S&P index recorded 11 new 52-week highs and 14 new lows, while the Nasdaq recorded 20 new highs and 149 new lows.
