The Dow Jones Industrial Average fell more than 100 points Thursday morning as Amazon and Walmart led a slide in consumer discretionary-related stocks.
The broader S&P 500 fell 0.4 percent shortly after the opening bell as energy and utilities shed more than 1 percent each. The tech-heavy Nasdaq Composite traded flat as Amazon dropped 1.3 percent and Facebook fell 0.8 percent.
Walmart’s mixed results weren’t enough to offset investor angst following news that renowned investor Warren Buffett dissolved his stake in the retail giant. Shares dropped 0.8 percent after the company reported strong e-commerce sales as it continues to tack on brands to compete with rival Amazon and foster its grocery segment. The giant retailer also raise its forecast for earnings and same-store sales in the U.S. for the full year, expecting a strong holiday season.
However, a filing with the Securities and Exchange Commission revealed that longtime investor Berkshire Hathaway dissolved its stake in the company.
Cisco shares rallied 4.2 percent after the tech giant beat on both the top and bottom lines for the first fiscal quarter. The San Jose, California-based Cisco reported revenue rose 7.7 percent as it takes action to mitigate the impact any future impact from the Trump administration’s trade dispute with China.
So far, it remains one of a handful of technology companies that has not seen headwinds as a result of tariffs between the two economic powerhouses, according to CEO Chuck Robbins.
“I can just tell you personally, I haven’t had one conversation with any customer around the tariffs at this point,” Robbins said during the company’s earnings call. “Secondly, I think that once we got past the midterms, we’ve begun to hear some positive, at least, headlines relative to the discussions, and I remain fairly optimistic that this has become a top priority for the administration.”
Bullishness following the forward progress in corporate earnings was offset, however, as brewing investor uncertainty around rising interest rates and an assertive Federal Reserve checked the major indexes.
Hedge fund billionaire Ray Dalio of Bridgewater Associates told CNBC on Thursday that despite the gradual interest rate hikes, the Fed has already damaged asset prices.
“We’ve raised interest rates to a level that it’s hurting asset prices,” the founder of Bridgewater Associates said in an interview with CNBC’s “Squawk Box. ” “We’re in a situation right now that the Fed will have to look at asset prices before they look at economic activity. It’s a difficult position.”
Fed Chairman Jerome Powell touted the strength of the U.S. economy Wednesday evening, saying that markets should adjust to the idea that the central bank could hike interest rates at any time starting next year. Though Powell acknowledged that while the global economy is not as robust as it was last year, he added that domestic economic growth still looks strong.
The yield on the benchmark 10-year Treasury note fell to 3.081 percent Thursday. Bond yields rise as prices fall.
The U.S. central bank has hiked its overnight rate three times so far this year and is widely expected to do so again in December. Investors tend to see higher interest rates as a threat to profit growth and a hurdle for companies with large amounts of debt.
“I’m very happy about the state of the economy now,” he said in an interview with Dallas Fed President Robert Kaplan. “Our policy is part of the reason why our economy is in such a good place right now.”
Sentiment across the globe has improved on reports that China has delivered a written response to U.S. trade demands. U.S. government sources told Reuters Wednesday that China had sent a response to U.S. demands on the ongoing trade negotiation, giving hopes to investors that the two sides might bring an end to the spat.
Concerns over an oversupply in oil markets continues to dominate the market. On Thursday, oil prices slipped amid fears of rising supply and slow consumption. Front-month Brent crude oil futures were trading at $66.42 per barrel on Thursday morning, down 30 cents, or 0.4 percent, from their last close. U.S. West Texas Intermediate (WTI) crude futures were at $56.29 a barrel.
Sterling plunged by over 1.4 percent against the dollar Thursday morning after U.K. Brexit Secretary Dominic Raab resigned from his post. This piles yet more pressure on U.K. Prime Minister Theresa May as she tries to get her draft Brexit agreement through Parliament.
Initial claims for state unemployment benefits rose 2,000 to a seasonally adjusted 216,000 for the week ended Nov. 10, the Labor Department said on Thursday. Retail sales rose 0.8 percent, higher than the 0.5 percent expected.
— CNBC’s Spriha Srivastava contributed reporting.