On October 23, 2023, the US stock market opened lower and continued to decline throughout the day, resulting in the largest drop seen in several weeks for the three major indices. By the end of the trading day, the Dow Jones Industrial Average fell by 0.96%, the S&P 500 dropped by 0.92%, and the Nasdaq Composite experienced a significant decline of 1.6%. Large tech stocks were hit hard, with many prominent Chinese stocks also seeing a downturn. The Nasdaq Golden Dragon Index, which tracks Chinese stocks listed in the US, fell by 1.2%, and the FTSE A50 futures continued to drop, closing down 0.68% in the overnight market. However, Tesla's stock surged over 11% in after-hours trading following a better-than-expected quarterly earnings report, showcasing a stark contrast in stock performance on the day.

In parallel with these market movements, the Federal Reserve released its latest “Beige Book” on the same day. The Beige Book provides a qualitative summary of economic conditions across the United States, based on a survey of businesses. According to the report, overall economic activity remained largely unchanged since the beginning of September. Only the Richmond and Chicago regions reported slight economic growth, while manufacturing activities in most areas were declining. The report suggested that while there were fluctuations in consumer spending and mixed reports on loan demand, the banking sector generally showed stability or mild improvement.

Among the noteworthy points from the Beige Book, it was observed that consumer spending varied by region, with shifts in purchasing behavior leaning towards lower-priced alternatives. The real estate market also maintained a generally stable profile, despite the increase in home inventories across the country. Home prices remained steady or saw slight upticks, but the unpredictable nature of mortgage rates left many potential buyers hesitant. A lingering lack of affordable housing continues to be a significant issue in many communities across the nation.

In terms of the agricultural sector, the impacts of recent hurricanes affected crop production, which subsequently led to a halt in business activities and tourism in parts of the Southeast. Overall agricultural activity remained flat or saw a slight decrease, with certain crop prices stagnating at unprofitable levels. Energy sector activities displayed a similarly stagnant trend, with lower prices squeezing producers' margins. Nevertheless, industry experts remained generally optimistic about long-term prospects, despite the increase in uncertainties.

Some analysts interpreted the Beige Book as signaling a generally dovish stance from the Federal Reserve, as economic changes remained minimal. Despite unexpected upticks in official employment figures, consumer prices, and retail sales in September, there are indications that the US economy continues to decelerate. Recent economic data has shown some improvement; however, Federal Reserve officials have cited anecdotes from economic contacts to justify a continued accommodative policy stance.

Currently, the target range for the federal funds rate stands at 4.75% to 5.00%. Market participants are now widely anticipating a 25 basis point cut in interest rates during the Federal Reserve’s meeting in November, followed by another similar reduction in December.

On the same day, the bearish trend in the US stock market showcased the fallout from the Beige Book's insights. Investors interpreted the lack of substantial economic shifts, coupled with a modest hiring landscape and controlled inflation rates, as reasons for the closing losses. By the end of trading on October 23, the Dow Jones had dropped 0.96%, the S&P 500 fell 0.92%, and the Nasdaq saw a drastic 1.6% decrease, with intraday losses having reached as profound as 2.3%.

Large technology stocks suffered as well, with Nvidia falling nearly 3%, leading to a staggering overnight loss of about $98 billion in market capitalization. Despite the overall downturn for many notable stocks, there were exceptions. Tesla’s stock price, while down at market close, skyrocketed in post-market trading due to its impressive earnings report, which revealed total revenues of $25.18 billion in the third quarter of its fiscal 2024. While this was slightly below analysts’ expectations, it represented a substantial increase from the $23.35 billion reported a year earlier. Additionally, Tesla noted a net income of $2.167 billion and an adjusted EPS of $0.72, with a gross margin of 19.8%, all surpassing market expectations.

Tesla’s positive news came on the back of decreasing sales costs per vehicle from its Shanghai factory and expectations of slight growth in deliveries for 2024. The company also projected a more than double year-on-year increase for its energy storage deployments in 2024.

Among other significant market movements, McDonald's stock saw a decline of over 5%. This downturn followed the Centers for Disease Control and Prevention (CDC) report indicating an outbreak of E. coli infections linked to food in ten states across the US. Such news has undeniably shaken consumer confidence and contributed to investor anxiety around the fast-food giant’s operations.

With regard to Chinese internet stocks, most experienced downward pressure as well, with the Nasdaq Golden Dragon Index slipping by 1.2%. Notably, Alibaba dropped 2.45%, JD.com fell 0.87%, Pinduoduo declined 4.8%, Nio decreased by 0.76%, Bilibili was down 0.49%, Baidu fell 2.21%, NetEase dropped 1.22%, Tencent Music decreased by 1.78%, and iQIYI was down 1.94%. Meanwhile, the FTSE A50 futures continued its downward trajectory in the overnight market, closing down 0.68%.