The corporate earnings season is in full swing, and investors are feeling the heat as concerns grow about the struggles of some of the largest U.S. companies amidst rising rates and recession fears. On Wednesday, the Dow Jones Industrial Average fell by 190 points, or 0.56%, the Nasdaq Composite dropped 1%, and the S&P 500 slipped 0.76%.
Technology stocks bore the brunt of the losses, with Microsoft plummeting on underwhelming guidance. Alphabet, Nvidia, and Tesla were also down by more than 3% each, while Boeing fell by 3% following a top-and bottom-line miss.
Many investors had bought stocks heading into the earnings season, expecting better-than-expected results as companies reset and lowered their expectations. However, the reports so far across sectors have mostly dashed these hopes, with many companies sharing dismal outlooks.
This week, investors are bracing for more high-profile corporate earnings, as fears of a recession persist, with companies such as Tesla and IBM set to post their numbers after the bell. So far, more than 19% of S&P 500 companies have reported their fourth-quarter earnings, with 68% of them posting stronger-than-expected results, according to FactSet. This beat rate, however, lags historical trends, with the average beat rate for fourth-quarter earnings being 79%, according to The Earnings Scout CEO Nick Raich.
Wednesday’s moves followed a three-day winning streak for the blue-chip Dow, with all three major averages trading flat or slightly lower for the week.