Dow Jones falls over 300 points on trade worries, disappointing earnings; Nasdaq drags

Benchmark indices on Wall Street gave up a strong start to the week over resurfacing concerns of tensions between the US and China, sanctions imposed by the White House on Russia's top two oil producers, and a disappointing bunch of corporate earnings, including those from Netflix, Tesla, Texas Instruments and IBM.

The Dow Jones fell nearly 350 points, while the S&P 500 and Nasdaq declined 0.5% and 1% respectively. The Russia sanctions has led to a 5% jump in Brent Crude, which is back towards the mark of $65 a barrel, while the West Texas gained nearly 2.5% to head back to $60 per barrel. The rising tensions also led to a rebound in Gold prices after its biggest fall in five years.

A White House official stated on Wednesday that the Trump Administration is considering export restrictions against China, that will bar the world's second-largest economy from purchasing critical software. Treasury Secretary Scott Bessent said that "everything is on the table," when asked about such a move. US President Donald Trump had previously threatened a 100% additional tariff on China from November 1, if things do not work out between the two countries.

Elsewhere, the US has sanctioned Russia's biggest oil producers, Rosneft PJSC and Lukoil PJSC due to "Russia’s lack of serious commitment to a peace process to end the war in Ukraine." The White House also said that there are no immediate plans of Trump and Putin to meet, days after the former had announced a summit in Budapest.

On the earnings front, Netflix shares fell 10%, the most since April 2022, after the company's revenue missed expectations for the first time in two years. A tax dispute with Brazil also impacted its operating performance. Tesla fell as much as 5% afterhours despite reporting revenue growth for the first time in two quarters, as a 50% jump on operating expenses dented the Earnings per Share (EPS) of the electric vehicle manufacturer. IBM reported slower growth in two key verticals, leading to a 6% drop in extended trade, while Texas Instruments, the largest manufacturer of analog chips, fell 5.5% after issuing guidance that disappointed the street.

Despite this, the proportion of companies beating earnings expectations this quarter is the highest since 2021. Most S&P 500 firms typically top expectations, but this season stands out considering that analysts had set the bar higher, according to Bloomberg data.