U.S. stocks took a hit on Wednesday, with tech stocks leading the decline while the broader market awaited earnings reports from Tesla, Inc., and IBM. The Dow Jones Industrial Average fell 0.8%, the S&P 500 dropped roughly 1%, and the Nasdaq Composite led losses with a dip of about 1.4%.
Investors are in earnings-watch mode after Tuesday’s strong results from blue-chip companies, but the mood turned cautious once again as tech stocks faded. A steep drop from the streaming giant Netflix weighed on sentiment, while markets also dealt with the lingering U.S. government shutdown and expectations for upcoming inflation data.
Market Movers:
- Netflix (NFLX): The stock tumbled more than 10% following a disappointing earnings report, which included a tax dispute in Brazil and weaker-than-expected growth guidance. The plunge dragged other tech names and reinforced investor caution in the sector.
- Tesla (TSLA): Shares fell about 3% ahead of its earnings release after the bell, with the market looking to its robotaxi ambitions and AI strategy. Though Tesla has delivered strong numbers historically, expectations are now heightened and any shortfall could trigger more downside.
- Intuitive Surgical (ISRG): The medical robotics company surged nearly 17% after posting forecast-beating earnings and revenue. Strong demand for its da Vinci surgical systems and rising procedure volumes reinforced investor optimism about growth in minimally invasive surgery.
- Texas Instruments (TXN): Stock fell nearly 9% after the chipmaker warned of a slower-than-expected recovery across the semiconductor sector. The cautious outlook overshadowed otherwise steady quarterly results, suggesting lingering weakness in industrial and automotive chip demand.
- DraftKings (DKNG): Shares gained about 6% after the company announced plans to enter prediction markets through its acquisition of Railbird Technologies. The move signals DraftKings’ intent to diversify its platform beyond traditional sports betting and capitalize on the expanding real-money gaming market.
- Mattel (MAT): The toymaker dropped more than 5% after third-quarter results fell short of Wall Street forecasts. While management projected a “decent” holiday season, slowing North American sales raised concerns about near-term consumer demand.
- Beyond Meat (BYND): The plant-based food company jumped another 100%, bringing its gain to nearly tenfold since last Friday. The stock continues to ride a meme-fueled wave of retail enthusiasm, following its addition to the Roundhill Meme ETF and expanded Walmart distribution deal.
Tech Under Pressure
While earnings from industrials and consumer companies were largely positive, the tech sector struggled under pressure. Netflix’s steep dip highlighted how quickly investor sentiment can turn when key growth stocks falter. Many tech stocks are trading at elevated valuations, and any sign of earnings stress can ripple through the index.
Tesla’s upcoming report looms large as a barometer for the so-called “Magnificent Seven” tech cohort. If Tesla misses, it could raise questions about AI and growth fatigue across the sector. Meanwhile, the government shutdown continues to cloud the release of key economic data, including inflation and employment figures, adding weight to corporate results.
Broader Macro Risks Keep Investors Cautious
The ongoing U.S. government shutdown has delayed official releases of key economic data, including last week’s Consumer Price Index report. With the Federal Reserve expected to convene soon, the absence of fresh data is heightening uncertainty around the central bank’s next move. Investors are watching closely for any shift in tone that could signal policy changes.
On the trade front, there was a faint sigh of relief as the U.S. and India moved toward a tariff reduction deal — yet global trade tensions remain unresolved. For many investors, the backdrop of geopolitical risk adds a layer of caution even amid earnings-driven optimism.
Looking Ahead
With Tesla’s earnings just around the corner and major inflation data due soon, markets stand at a crossroads. If Tesla delivers and inflation proves tame, we could see renewed upside. But any misstep, either corporately or economically, could put pressure on the recent rally. For now, Wall Street is cautiously waiting. The direction in the next few days may come down less to macro headlines and more to how companies deliver — and whether the gap between expectations and reality in tech begins to narrow or widen.