The Selloff

Markets slid Wednesday as investors digested a flood of earnings reports.

The Dow Jones Industrial Average fell over 350 points, or 0.8%. The S&P 500 lost around 0.8%. The tech-heavy Nasdaq Composite led declines, dropping about 1.5%.

Wall Street had been riding high on strong third-quarter earnings so far. That optimism faded Wednesday as the first wave of megacap tech results rolled in.

Netflix Gets Hammered

Netflix drove tech stocks lower, plunging more than 10%.

The streaming giant missed earnings expectations. A big reason? A tax dispute with Brazil that hit profits harder than expected.

The Netflix drop pulled other streaming and entertainment stocks down with it. When a major tech name misses, it often drags the whole sector.

Toy maker Mattel also pulled back after North American sales fell short of forecasts.

All Eyes on Tesla

Tesla reports earnings after the market closes Wednesday. That's the main event investors are watching.

Tesla stock fell around 2.5% during regular trading in anticipation of the results. The electric vehicle maker kicks off a round of "Magnificent Seven" earnings that could test whether the recent stock rally has legs.

The Magnificent Seven - Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla - have driven much of this year's market gains. Their earnings will show whether those valuations are justified.

Gold Extends Losses

Gold continued falling Wednesday after its biggest one-day decline in over a decade on Tuesday.

The precious metal had been on a tear to record highs. That rally came to a sudden halt this week with no clear trigger. Gold's sharp reversal has left investors scratching their heads.

We covered the gold crash earlier - it's part of a broader shift in market sentiment as risk appetite wavers.

Trade War Uncertainty

Markets remain on edge about trade developments.

President Trump keeps injecting fresh uncertainty around China tensions. A new report said Trump could consider steep restrictions on U.S. software exports to China. That would be a dramatic escalation in the trade war.

At the same time, there's positive news with India. The U.S. and India are reportedly close to a deal cutting tariffs on Indian exports to as low as 15%, down from the current 50%. That would be a significant breakthrough.

The whiplash between escalation and de-escalation keeps markets guessing about trade policy direction.

Why Tech Led Declines

The Nasdaq's 1.5% drop - double the broader market's loss - shows tech taking the brunt of selling.

Several factors are weighing on tech stocks: • Netflix's earnings miss raising concerns about other tech results • Anticipation and nervousness ahead of Tesla and other Magnificent Seven reports • General uncertainty about whether AI-driven valuations are sustainable • Software export restriction fears hitting tech particularly hard

Tech has led the market higher this year. When sentiment shifts, it leads on the downside too.

The Earnings Test

Third-quarter earnings have been solid overall. About 75% of companies that reported so far have beaten expectations.

But now the megacap tech companies are reporting. These are the stocks that drove the market's gains. They need to deliver strong results to justify their valuations.

Tesla is first up. If Tesla disappoints like Netflix did, expect more selling Thursday. If Tesla beats and guides higher, it could stabilize markets.

The next few trading sessions will be critical as Microsoft, Meta, Apple, Amazon, and Alphabet all report.

The Bottom Line

Wednesday's selloff reflects growing nervousness about whether the rally can continue.

Netflix's 10% crash on an earnings miss is a warning shot. It shows how quickly sentiment can turn when results disappoint. With tech stocks trading at premium valuations, there's little room for error.

Tesla's after-hours report will set the tone for Thursday's trading. A beat could calm nerves and restart the rally. A miss could accelerate selling as investors reassess tech valuations.

The trade war uncertainty adds another layer of worry. Software export restrictions on China would hit tech companies hard. At the same time, a potential India deal shows Trump is willing to negotiate.

Markets hate uncertainty. Right now there's plenty of it - around earnings, trade policy, and whether AI valuations are justified.

Gold's continued decline suggests investors are moving away from safe havens, but tech's underperformance shows they're not embracing risk either. That's a cautious middle ground that often precedes bigger moves in one direction or another.

For now, all eyes are on Tesla and the coming wave of Magnificent Seven earnings. Those results will likely determine whether stocks can hold recent gains or face a more significant pullback.