Losses for Big Tech pull Wall Street lower

Audio By Carbonatix

NEW YORK (AP) — Stocks fell in afternoon trading on Wall Street Tuesday, pulled down by losses in the same big tech companies that have been the main drivers of the market’s rally so far this year.

The S&P 500 fell 1%. The Dow Jones Industrial Average fell 238 points, or 0.5%, as of 12:19 p.m. Eastern time. The Nasdaq composite sank 1.7%.

The majority of stocks within the S&P 500 fell and technology companies were the biggest weights dragging the market lower.

Palantir Technologies, which had more than doubled so far this year, fell 7.4% despite reporting results that beat analysts’ forecasts.

Nvidia also reversed course from a day earlier, falling 3.2%, while Microsoft fell 1%. Their huge values give them outsize influence over the market's broader direction.

Wall Street remains focused on corporate earnings. Roughly three out of every four companies within the S&P 500 have reported their latest results, which have been mostly better than analysts expected.

“However, expectations for technology firms seem higher, and disappointments appear to be having a disproportionately negative effect,” Paul Christopher, head of global investment strategy at Wells Fargo Investment Institute, wrote in a note to investors.

Animal health care company Zoetis plunged 12.1% after cutting its sales forecast for the year. Norwegian Cruise Line slid 14.7% after giving Wall Street a mixed earnings report and forecast.

Uber slumped 6.3% despite reporting financial results that beat analysts' expectations.

Several big companies will report their latest financial results later this week, including McDonald's, Expedia Group and Qualcomm.

The latest round of corporate profit reports and forecasts have taken on more significance for Wall Street amid the U.S. government shutdown. Investors and economists are trying to gauge the health and direction of the U.S. economy without the latest economic updates on inflation and employment.

The lack of timely economic data has also left the Federal Reserve without many of the resources it needs to make decisions on interest rate policy. That has added more doubts to whether the central bank will continue cutting its benchmark interest rate amid stubborn inflation and a weakening job market.

The central bank cut its benchmark interest rate in October for the second time this year. Fed Chair Jerome Powell has cautioned that further rate cuts aren't guaranteed. Other Fed members have since also expressed concerns about more rate cuts with inflation remaining stubbornly above the central bank’s target of 2%.

Wall Street is forecasting a 70% chance of a rate cut at the Fed’s next meeting in December, according to CME FedWatch. That’s down from a 90.5% a week ago, just before the last Fed meeting.

Outside of earnings, Tesla fell 4% after Norway’s sovereign wealth fund, one of the electric car maker’s biggest investors, said Tuesday that it will vote against a proposed compensation package that could pay CEO Elon Musk as much as $1 trillion over a decade.

There will be more than a dozen company proposals up for a vote Thursday during Tesla’s annual meeting, but none have generated more division than Musk’s potentially massive pay package.

Yum Brands jumped 6.1% after the company said it is considering selling its selling its Pizza Hut unit, which has struggled to compete in a crowded pizza market.

Novo Nordisk slipped 1% after it raised its offer to buy drugmaker Metsera, which jumped 18.3%. Novo Nordisk is trying to outbid rival Pfizer, which rose 0.3%.

European markets were mostly lower and Asian markets fell overnight.

Treasury yields edged lower in the bond market. The yield on the 10-year Treasury edged down to 4.09% from 4.10% late Monday.