Oct 7 (Reuters) - The Nasdaq and the S&P 500 eased from record highs on Wednesday as Treasury yields and oil prices rebounded, keeping investors cautious as they awaited the minutes of the Federal Reserve's September meeting.
Sentiment turned more cautious as investors reassessed the outlook for interest rates and energy costs. Brent crude was back above the psychologically important $100-a-barrel level as Middle East supply concerns persisted.
"We're seeing a little bit of profit-taking today. The market is very focused on the Fed minutes, but ultimately it's where oil prices and yields move that will determine the market's direction today," said Peter Cardillo, chief market economist at Spartan Capital Securities.
Chip stocks were among the top decliners. Memory chip firm Micron Technology (MU.O), dropped 2.3%, chip giant Nvidia (NVDA.O), eased 0.7% and the broader Philadelphia chip index (.SOX), fell 2.3%.
Elon Musk's SpaceX (SPCX.O), lost 1.7% after a Financial Times report that the rockets-to-AI firm was seeking $40 billion in financing to fund purchases of Nvidia chips.
Eight of the 11 S&P 500 sectors traded lower, with the materials (.SPLRCM), and industrials (.SPLRCI), leading losses.
Energy (.SPNY), and healthcare (.SPXHC), were higher, up 0.6% each.
At 9:43 a.m. ET, the Dow Jones Industrial Average (.DJI), fell 472.21 points, or 0.92%, to 51,049.07, the S&P 500 (.SPX), lost 44.80 points, or 0.56%, to 7,775.04 and the Nasdaq Composite (.IXIC), lost 235.16 points, or 0.85%, to 27,364.73.
The yield on 30-year Treasury bonds rose to the highest since 2002, last at 5.72% ahead of the release later in the day of minutes from the US Federal Reserve's September policy meeting, when policymakers raised interest rates to combat inflation.
Traders react to the Fed rate announcement on the floor of the NYSE in New York
A trader works, as screens broadcast a press conference by U.S. Federal Reserve Chair Kevin Warsh following the Fed rate announcement, on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., July 29, 2026. REUTERS/Brendan McDermid/File Photo Purchase Licensing Rights, opens new tab
Traders widely expect the Fed to hold rates steady at its October meeting, but a December hike remains on the cards, according to the CME FedWatch Tool.
The S&P 500's equal-weighted counterpart (.SPXEW), meanwhile, stands more than 5% away from record highs and the interest-rate-sensitive Russell 2000 small-cap index (.RUT), is down more than 8% from its all-time high.
MARKETS BRACE FOR EARNINGS
Focus will likely shift to how corporate America is faring as the third-quarter earnings season kicks off next week, with a number of high-profile financial firms expected to report on Tuesday.
US stocks have been buoyed lately by optimism around the AI trade and expectations of strong corporate earnings, despite higher energy prices and a summer selloff in bond markets that fueled concerns about tighter monetary policy.
Analysts currently expect S&P 500 earnings growth of 30.6%, in aggregate, for the July-to-September period, led by an expected 114.7% jump in energy earnings, followed by a 66.5% estimated surge in tech results, according to LSEG.
While the 30% profit growth is smaller than in the second quarter, when S&P 500 companies posted a 54% jump in earnings, investors expect a largely positive season to underpin record-high stock markets.
Among other movers, Roblox fell 1.6% after Google and Unity announced a partnership on a new AI gaming platform that could compete with the gaming platform's offerings.
Declining issues outnumbered advancers by a 3.74-to-1 ratio on the NYSE and by a 3.19-to-1 ratio on the Nasdaq.
The S&P 500 posted 8 new 52-week highs and 5 new lows, while the Nasdaq Composite recorded 8 new highs and 129 new lows.
Reporting by Tharuniyaa Lakshmi and Shashwat Chauhan in Bengaluru; Editing by Maju Samuel
