Closing Recap

U.S. stocks finished broadly lower, with the Nasdaq leading the declines, as disappointing earnings from Tesla and Netflix weighed heavily on the technology sector and broader market sentiment; gold extended its sharp sell-off, oil rebounded, while the dollar firmed and Treasury yields were mixed. In the currency markets, the U.S. dollar firmed as risk sentiment soured, with the British Pound weakening on soft UK inflation data and the Euro hovering near 1.1600, while the Japanese Yen was on the defensive due to political uncertainty. While Bitcoin forming a bearish “death cross” pattern on its daily chart and trading below $109,000. 

Key Takeaways 

• Stocks Fall on Disappointing Tech Earnings: Major indices declined (S&P -0.5%, Nasdaq -0.9%), with the Nasdaq underperforming after weak results and outlooks from Tesla (TSLA) and Netflix (NFLX) soured sentiment. 
• Gold Extends Sharp Sell-Off: Gold prices fell another 1%, extending the rout from the previous day’s historic plunge, as the market continued to unwind from extremely overbought levels. The historic rally is now undergoing a sharp and necessary correction.
• Government Shutdown Enters Day 23: The ongoing U.S. government shutdown continues to be a major source of uncertainty, delaying key economic data and fueling safe-haven demand. 
• Defensive Rotation Continues: Defensive sectors like Consumer Staples, Health Care, and Energy outperformed in a risk-off session, while cyclical areas lagged. 
• Dollar Firms Ahead of Key CPI Data: The U.S. dollar firmed, with the British Pound weakening to below 1.3350 after soft UK CPI data, while the Euro was subdued near 1.1600 and the Japanese Yen was pressured by domestic political turmoil. 
• Bitcoin Sinks: Bitcoin prices remained under pressure, dropping to near $108,600, with technical patterns like a “death cross” signaling potential for more downside. 
• Oil Prices Rebound: Crude oil prices gained over 2%, supported by bullish EIA inventory data showing a surprise crude draw. 
• Yields Mixed: Treasury yields were mixed, with the 10-year yield holding steady around 3.953%, as investors balanced earnings against ongoing policy and political uncertainties. 

Market Overview

After a powerful rebound, Wall Street took a step back on Wednesday as the reality of earnings season began to set in. U.S. equity markets finished with broad losses today, with the technology sector leading the decline after disappointing earnings reports from key bellwethers Tesla (TSLA) and Netflix (NFLX). The weak results from these market darlings, which have been major drivers of the recent rally, appeared to trigger a bout of profit-taking and raised concerns about the sustainability of the “AI Revolution” thesis. Tesla’s shares dropped 5.6% after the company reported a 37% drop in profits, and Elon Musk’s focus on a robotaxi vision and a controversial pay package may have further dampened investor confidence. The Nasdaq was the clear underperformer, and even sectors that had shown recent strength finished in the red. 

Index	Up/Down	% Change	Last
DJ Industrials	-334.33	-0.0071	46590
S&P 500	-35.92	-0.0053	6699
Nasdaq	-213.27	-0.0093	22740
Russell 2000	-36.14	-0.0145	2451

The day saw a notable rotation into defensive sectors, with Consumer Staples, Health Care, and Energy outperforming in a risk-off session. The “buy the dip” mentality, while not entirely absent, was less aggressive than in recent sessions. The ongoing U.S. government shutdown, now in its 23rd day, continues to create an information vacuum by delaying key economic data, leaving the market to trade on earnings and sentiment. 

On the trade front, President Trump’s softened rhetoric on China continued to provide some underlying support for risk assets, even as he floated new tariff ideas. In Washington, the stalemate over the government shutdown continues, with no clear path to a resolution. Investors are now looking ahead to the start of a heavy earnings week, with reports from major tech companies on the docket. In Japan, the Yen is weakening again as the market refocuses on new PM Takaichi’s pro-stimulus agenda. European markets are set to open with a defensive posture, taking their cue from the weaker close on Wall Street.

Economic Calendar

With the U.S. government shutdown ongoing, there were no major U.S. economic data releases yesterday. The market continues to be driven by corporate earnings, private surveys, and political headlines. The main highlight for today is the Canadian retail sales report. 

• Canadian Retail Sales (Aug): Retail sales M/M 1.0% vs -0.8% prior, while the ex-Autos M/M figure is seen at 1.3% vs -1.2% prior. 
• Q3 Earnings Season Continues: Reports from major tech companies. 
• U.S. Government Shutdown ongoing. 

Commodities, Treasuries and Currencies 

The big story in commodities is the sharp correction in Gold. After a historic nine-week rally, the precious metal has suffered a second day of heavy losses, with futures settling down 1.06% at $4,065.40. The precious metal is now down significantly from its recent all-time high, with the sell-off attributed to a deleveraging event and profit-taking from extremely overbought levels. Crude oil prices rebounded, with WTI settling up $1.26 (+2.2%) at $58.50/bbl, supported by bullish EIA inventory data showing a surprise crude draw and a jump in refinery utilization. 

Asset	Up/Down	Unit / % Change	Last
WTI Crude	1.26	USD/bbl	58.5
Brent	1.27	USD/bbl	62.59
Gold	-43.7	USD/oz	4065.4
EUR/USD	0.001	USD	1.1608
USD/JPY	-0.07	JPY	151.86
10-Year Note	-0.01	%	0.03953

In the currency markets, the U.S. Dollar Index (DXY) was firm as risk sentiment soured, with the EUR/USD pair weakening to near 1.1600. The British Pound was also on the defensive after a soft UK jobs report. The Japanese Yen was volatile, reacting to domestic political turmoil. The currency market is seeing a resurgence in U.S. Dollar strength as traders seek safety amid mixed earnings and lingering trade uncertainties:

• USD/JPY: The pair is on the rise again, climbing towards 152.50. The Japanese Yen has resumed its downtrend as the market prices in the prospect of a large-scale stimulus package from new PM Takaichi and a delayed Bank of Japan rate hike. A $1.2B options expiry at the 152.00 level could act as a magnet for price action today. 
• EUR/USD: The Euro is edging lower towards 1.1600, pressured by the firmer U.S. Dollar. The pair remains in a tight range, with a $1.5B options expiry at the 1.1575 level potentially limiting downside moves in the near term. 
• GBP/USD: Sterling is extending its losing streak for a fifth consecutive day, trading around 1.3340. The pair is being weighed down by broad dollar strength and the after-effects of yesterday’s soft UK inflation data.

U.S. Treasury yields slipped, with the 10-year yield holding steady around 3.953%, as investors remained in the dark about the economy due to the government shutdown. Bitcoin remained under pressure, dropping to near $108,600, with technical patterns like a “death cross” signaling potential for more downside.

Looking Ahead 

The market will be keenly focused on upcoming Q3 earnings reports, particularly from the major tech companies, for insights into corporate health and guidance. The primary macro focus remains on the U.S. government shutdown and any progress toward a resolution. The dramatic and historic moves in gold and Bitcoin this week will also be a key theme for traders to watch for follow-through. What to watch: 

• The Gold Correction: The key question is whether the sharp pullback in gold is a healthy correction or the start of a more significant top. The long-term pattern suggests the current 10-year bull run may be maturing, and historical precedent shows that after nine-week winning streaks, gold tends to fall over the subsequent two months. 
• Earnings as the Only Guide: In the data vacuum, corporate earnings are the only real guide to the health of the U.S. economy. Disappointments from market leaders like Tesla and Netflix are a warning sign. The market’s reaction to the next batch of reports will be crucial. 
• Bitcoin’s Death Cross: The bearish technical pattern on Bitcoin’s daily chart is a significant warning for crypto traders. A failure to reclaim key moving averages could open the door for a much deeper correction, with the Fear and Greed Index already showing signs of stress.