U.S. stocks experienced a downturn on Wednesday as investors assessed recent earnings from major banks alongside economic data, while remaining vigilant for possible U.S. responses to the turmoil in Iran.
The Nasdaq Composite fell approximately 1.6%, and the S&P 500 dropped by 1%. The Dow Jones Industrial Average also declined about 0.6%. This downturn follows a retreat in financial stocks, which has led to a dip in Wall Street indices from their record highs.
Technology shares drove the decline, particularly among large-cap stocks. Nvidia saw its shares decline despite receiving U.S. approval for chip exports to China, amid reports of expected restrictions. Additionally, Tesla and Broadcom also experienced significant losses.
Concerns about U.S. military action in response to instability in Iran escalated. President Trump has intensified military threats following a violent crackdown on protests, causing oil prices to rise to two-month highs as Iran threatened retaliation and the U.S. pulled some personnel from regional bases.
This context coincided with strong quarterly earnings from Bank of America and Wells Fargo, both of which reported significant profit increases driven by active trading. However, their stock prices fell, reflecting a broader trend of investor skepticism in the early earnings season, triggered by previous disappointing releases, including that of JPMorgan Chase.
On the macroeconomic front, investors analyzed recent data indicating subdued wholesale inflation, adding to expectations that the Federal Reserve might maintain steady interest rates in January. Meanwhile, retail sales showed a surprising increase in November, exceeding economists’ expectations.
The anticipation of potential Fed rate cuts has also bolstered gold and silver prices, pushing them to new record highs. Amid rising geopolitical tensions, investors are seeking safety in precious metals as they navigate the uncertain financial landscape.
