Wall Street falls driven by US Treasury yields, which reach highest levels since July

Wall Street go back this tuesday as investors digest the recent bond market sell-off and were preparing for the next wave of earnings reports.

The S&P 500 fell more than 0.3%, the Dow Jones Industrial Average (^DJI) fell about 0.2%, and the tech-heavy Nasdaq Composite (^IXIC) fell about 0.1% %.

The sectors of the New York market that generate gains this Tuesday are those of defensive consumption (+0.4%); that of energy (+0.3%) and that of Real Estate that climbs (0.1%).

Stocks face downward pressure due to growing doubts about whether the Federal Reserve will continue to cut interest rates aggressively or even maintain current levels in November. The strength of the economy, the Fed’s cautious messages and concerns about The fiscal impact of a possible victory of Donald Trump in the elections are influential factors.

Treasury bonds and pressure on equities

Amid the uncertainty, the 10-year Treasury yield (^TNX) remained around 4.2% after Monday’s strong gains, which pushed it above that level for the first time since July. Bond sales impact interest rate-sensitive stocks, such as real estate, as rising yields are often a catalyst for falling stocks.

In corporate results, General Motors (GM) raised its profit forecast for the third time this year, thanks to strong sales of electric vehicles that boosted a quarterly profit and exceeded revenue expectations. GM shares rose more than 5%. On the other hand, GE Aerospace (GE) falls more than 7% and Verizon shares retreated about 5% following mixed third-quarter reports.

Meanwhile, anticipation is building for Tesla’s (TSLA) results on Wednesday, as Wall Street debates whether the Big Tech Seven (“Magnificent Seven”) will lead the market’s next bullish push.

Despite higher yields, gold prices (GC=F) rose, on track to recapture Monday’s record, as investors sought refuge from the presidential elections in the US and the increase in tensions in the Middle East.

Tesla in the sights of investors

Tesla Inc. approaches its earnings day under a cloud of uncertainty, with investors disappointed by the lack of details on its robotaxis plans.they will want to see some assurance that the EV maker has a plan to change course.

Elon Musk’s company plans to report its third quarter results this Wednesday, after market close. Analysts surveyed by FactSet expect the electric vehicle maker to report adjusted earnings of about 60 cents per share, on revenue of $25.5 billion.

However, it is worth remembering that last year, Tesla reported adjusted earnings of 66 cents per share in the third quarter, with revenues of $23.4 billion.

The stock is down after six of its last eight earnings reports, with an average fluctuation in the share price of plus or minus 10% in the eight days following the publication of the results.

Tesla is the only member of the so-called “Magnificent Seven” group of big tech companies that has yet to hit new all-time highs this year, with the stock down about 47% from its all-time high on Nov. 4, 2021.