Stocks fell on Wednesday as new developments out of Washington exacerbated concerns among investors about U.S.-China trade relations. Disappointing corporate earnings from companies including Texas Instruments and Netflix also weighed on the major averages. The Dow Jones Industrial Average traded lower by 386 points, or 0.8%. The S&P 500 fell 0.8%, while the Nasdaq Composite shed 1.4%. At session lows, the Dow was down more than 400 points, or about 1%, while the S&P 500 and the Nasdaq decreased 1.2% and 1.9%, respectively. Stocks took a leg down Wednesday after Reuters, citing a U.S. official and three people briefed by U.S. officials, reported that the White House is weighing curbs on exports to China made with U.S. software. The sources said the plan is not the only option being considered and might not proceed.
The developments come after President Donald Trump nearly two weeks ago said the U.S. would implement export restrictions by Nov. 1 on “any and all critical software.”
Earlier in the day, equities were already under pressure, hurt by Texas Instruments dropping 7% after the semiconductor company’s latest earnings came in weaker than expected. The company’s fourth-quarter earnings forecast was soft as well. Texas Instruments also plagued the broader semiconductor sector more broadly. In Semiconductor declined 5%, and Advanced Micro Devices slipped 4%. Micron Technology , as well as the VanEck Semiconductor ETF (SMH) , slid 3%. Netflix shares have also been returning to the market. The streaming platform slumped 9% after missed earnings estimates due to a dispute with Brazilian tax authorities. Intuitive Surgical was a bright spot Wednesday, with shares rallying 14% on the back of strong earnings and revenue. Investors are now looking ahead to some upcoming earnings reports that could offer a boost to equities. For instance, Tesla’s expected earnings Wednesday after the bell will kick off highly anticipated reports from the “Magnificent Seven” megacap tech group.
As it stands, more than three-quarters of the S&P 500 companies that have posted results so far will have exceeded expectations, according to FactSet. “Perhaps amid reports that US corporate earnings outcomes for Q3 have been much better than expected, there may remain some concerns about guidance from management as the US corporate earnings season expands to encompass more stocks and more sectors,” Thierry Wizman, global FX and rates strategist at Macquarie Group, said in a note. “The few high-profile reports issued overnight (e.g., Netflix, Texas Instruments) have been downbeat in tone,” he continued. The Dow Industrials are coming off a record-setting session, briefly topping 47,000 on Tuesday, thanks to strong results from Coca-Cola and 3M . The S&P 500 and Nasdaq lagged, however, after Trump said his expected meeting next week with Chinese President Xi Jinping may be called off.