Wall Street slips as rising bond yields weigh on megacaps

US stock indexes experienced declines on Wednesday, influenced by losses in major companies such as Tesla and Uber, while a rebound in bond yields added pressure on large-cap stocks as investors sought clarity on the Federal Reserve's interest rate trajectory.

Uber saw a 5.4 per cent decrease after projecting second-quarter gross bookings below expectations and revealing an unexpected first-quarter loss in the ride-hailing platform's financial report.

Meanwhile, Tesla fell 3.1 per cent following reports that US prosecutors were investigating potential securities or wire fraud related to the company's communication regarding its electric vehicles' self-driving capabilities.

Among other major stocks, Microsoft, Nvidia, and Alphabet faced declines ranging from 0.3 per cent to 1.1 per cent, partly due to an increase in the 10-year Treasury yield after five consecutive days of declines.

The market's losses occurred after the S&P 500 closed higher for the fourth consecutive session on Tuesday, marking its best winning streak since March. The Dow Jones also notched its fifth consecutive gain, the longest positive run since December 2023.

Investors have witnessed mostly upward movements in May, encouraged by positive earnings reports and a recent labor market update that eased concerns about prolonged interest rate hikes by the Federal Reserve.

According to the CME Group's Fedwatch tool, traders are now pricing in a 65 per cent probability of the Fed implementing at least a 25-basis-point interest rate cut in September, up from approximately 54 per cent a week ago.

Dylan Kremer, chief investment officer at Certuity, noted, "The market has factored in the Fed's actions for the remainder of the year, shifting focus to economic and earnings indicators."

Investors eagerly anticipate comments from Fed speakers scheduled for the day, including Vice Chair Philip Jefferson and other officials, for insights into the central bank's monetary policy plans.

As the earnings season winds down and economic reports remain scarce this week, market participants await next week's consumer prices data for signs of inflation trends.

Real estate stocks led sectoral declines, with the rate-sensitive sector falling by 0.8 per cent.

By 09:38 a.m. US time, the Dow Jones Industrial Average fell 7.11 points, the S&P 500 lost 16.17 points, and the Nasdaq Composite declined by 88.08 points.

Intel faced a 2.2 per cent drop after reports that the US Department of Commerce would revoke certain export licenses for its consumer-related items to a Chinese customer, impacting its second-quarter revenue.

Conversely, Lyft saw a 7.8 per cent increase after forecasting higher-than-expected gross bookings and projecting a core profit for the current quarter.

Declining issues outnumbered advancers on both the NYSE and Nasdaq exchanges.

The S&P 500 marked 12 new 52-week highs and 2 new lows, while the Nasdaq recorded 22 new highs and 38 new lows.

(With PTI inputs)