U.S. stocks ended Wednesday's session lower.

The Dow Jones Industrial Average declined 234.21 points, or 0.6%, to end at 38,763.45. The S&P 500 slipped 0.77% to finish at 5,199.50, while the Nasdaq Composite pulled back 1.05% to close at 16,195.81.

— Hakyung Kim

Despite some recent rough market waters, financial conditions haven't tightened enough for the Federal Reserve to take any unusual actions like an emergency rate cut, according to Deutsche Bank.

Using the Fed's own proprietary measure, Deutsche said conditions have only tightened about 0.15 basis points from July 31, when the Fed's most recent meeting concluded, through the ensuing market washout on Monday. Moreover, being that the market has been rallying since then, the actual tightening is probably less.

Still, it's the biggest move in the Fed's financial conditions index since the November 2022 Fed meeting and bears watching, Deutsche economist Justin Weidner said in a note.

"While the sharp nature of the recent tightening could be concerning, the level of the [Fed index] suggests that financial conditions are still roughly neutral for forward-looking growth prospects," Weidner wrote. "Absent a sharper and broader(i.e., beyond equities) tightening of financial conditions, the recent market gyrations are unlikely to push the Fed towards more aggressive action."

The Fed's index uses a combination of seven variables, including stock market values, home prices, yields on various securities and the U.S. dollar.

—Jeff Cox

Cryptocurrencies retreated on Wednesday, a day after their slight bounce from Monday's rout, putting further pressure on crypto stocks.

Bitcoin stayed near the flat line for much of the day, but fell further in afternoon trading as the stock market's comeback rally faltered. It's still holding on to a two-day gain of 3%. It was last lower by 3% at $54,786.76, according to Coin Metrics. Ether dropped 6.5% to $2,338.71, erasing its Tuesday gains. 

Coinbase was last lower by more than 7%, while MicroStrategy and miners Marathon Digital and Riot Platforms slid 8% each.

— Tanaya Macheel

The weakness in small caps put downward pressure on the broader market Wednesday with the Russell 2000 benchmark falling 0.9%.

Small cap companies are more sensitive to economic fluctuations and they bore the brunt of this week's sell-off. Week to date, the benchmark is down 3.1%, and it has shed 9.4% in August alone.

— Yun Li

Nvidia, Home Depot and Tesla dropped about 2% during midday trading, reversing earlier gains.

The declines tempered some of the S&P 500's gain, with the index last up about 0.2%.

Super Micro Computer was the biggest loser in the index, plummeting 18% on the heels of its earnings report. Airbnb shed 14.5%, while Charles River Laboratories lost more than 12%. Walt Disney shares declined more than 3%.

— Samantha Subin

As the stock market's gains have shrunk on Wednesday, a key volatility indicator is picking up.

The Cboe Volatility Index jumped back above 26 in afternoon trading after hitting a low 21.97 earlier in the session. The index is still below its closing level of 27.71 from Tuesday, and way off from its peak above 65 on Monday.

The VIX is calculated based on market pricing for options on the S&P 500. Sometimes called Wall Street's "fear gauge," the index is intended to reflect expected volatility over the next 30 days.

— Jesse Pound

The Dow Jones Industrial Average turned negative in midday trading on Wednesday, as volatility throughout equities continues following a recovery from a three-day sell-off.

The 30-stock Dow slipped roughly 15 points after climbing as much as 480 points earlier in the session. These moves follow a 294 gain for the index on Tuesday and a stark 1,034 downturn on Monday.

— Brian Evans

The Dow swiftly broke below its 50-day moving average — a key technical level used to gauge short-term momentum — during Monday's carnage. It's now trying to move back above it.

The 30-stock index hit a high of 39,477.96 on Wednesday, briefly topping its 50-day mean of 39,443.23. A close above that mark could signal the recovery seen in the past two session has staying power.

— Fred Imbert

Here are the stocks on the move midday:

Fortinet – The cybersecurity stock was the biggest advancer in the S&P 500 on Wednesday, surging 26% after Fortinet posted a strong second-quarter report, as well as upbeat current quarter guidance. The cybersecurity company posted adjusted quarterly earnings of 57 cents per share on revenue of $1.43 billion. Analysts polled by LSEG had anticipated earnings of 41 cents per share on revenue of $1.40 billion.

Shopify – The stock popped more than 22% after the Canadian e-commerce company beat expectations for the second quarter. For the third quarter, Shopify said it anticipates revenue growth in the low-to-mid-20s percentage rate range compared to the same period last year. Analysts had expected year-over-year sales growth of 20.9%, per FactSet.

Lyft – The stock declined more than 12% after the ride-hailing company posted softer-than-expected third-quarter guidance. Lyft sees adjusted earnings before interest, taxes, depreciation and amortization coming in between $90 million and $95 million. Analysts anticipated a forecast of $103.4 million, per FactSet.

Read the full list here.

— Sean Conlon

The market sectors that led the rally from the start of 2024 until July 10 are now the biggest laggards from July 11 and onwards, according to Wolfe Research.

The technology sector, which surged 36% in the first period, as well as communication services which jumped 31%, are now in the red by 13% and 8% starting July 11, respectively.

"Given mixed results from the Mag 7 last week, election uncertainty and now concerns over the U.S. economic outlook, we expect these violent rotations to continue into the weaker seasonally August-October periods."

— Hakyung Kim

Calm investors appear to be the winners of the volatile market so far, according to Nationwide's chief of investment research Mark Hackett.

"The behavior of investors during periods of stress is important to observe to see if the buy-the-dip mentality is still in play," Hackett wrote in a Wednesday note to clients. "Institutional investors know that market declines are not unusual, with an average of three 5% declines and one 10% decline per year (the current one was 8.5%). This one felt painful because of the rapidity and the fact that it was preceded by a remarkably strong and calm market."

He mentioned Goldman Sachs data showing that following a 5% market decline, markets have gained an average of 6% in the following three months, with an 84% batting average. 

— Pia Singh

Super Micro Computer dropped 15% and headed for its worst day since April on the back of a mixed second-quarter earnings print.

The AI server company topped revenue estimates but fell short of earnings expectations for the fiscal fourth-quarter and reported a decline in gross margins. Adjusted earnings came in at $6.25 per share, falling short of the $8.07 expected by analysts polled by LSEG. The company also announced a 10-for-1 stock split and strong fiscal first-quarter guidance.

Shares of Super Micro Computer have slumped 39% over the past month amid a broader sell-off in technology shares. The stock is down more than 16% since the start of the week and headed for its fourth straight losing week.

— Samantha Subin

The era of merchandise margin expansion is over for retailers, Barclays said in a note Wednesday downgrading the sector to neutral from positive.

The sector is now seeing intensifying proportional activity, suggesting a weakening demand backdrop, analyst Adrienne Yih wrote in a note to clients.

"From this point in the recovery cycle, the only way to drive further margin expansion is leverage from accelerating sales above fixed-cost growth," she said. "We now believe that the majority of forward outlooks have far less upside opportunity and, in fact, potential risk to sales and margins in 2H24."

Yih is still positive on certain names, such as those that could benefit from the denim-based silhouette shift, including Gap.

— Michelle Fox

The stock market volatility in recent weeks is being driven not just by macro factors but also the results of individual companies, according to Goldman Sachs.

John Marshall of Goldman's derivatives team said in a note to clients that second-quarter earnings season is seeing the highest volatility in more than a decade.

"Fundamental volatility is high with stocks making outsized moves so far in this earnings season; the average stock moved +/-4.9% on earnings day, levels that were last seen in 2Q of 2009 when compared on a like-for-like basis," the note said.

— Jesse Pound

Fortinet was the biggest advancer in the S&P 500 on Wednesday. The cybersecurity stock surged more than 20% in midday trading, on pace for its best day going back to its public debut in 2009.

The move comes after Fortinet posted a strong second quarter earnings report, as well as upbeat current quarter guidance. The cybersecurity company posted adjusted quarterly earnings of 57 cents per share on revenue of $1.43 billion. Analysts polled by LSEG had anticipated per-share earnings of 41 cents on revenue of $1.40 billion.

— Sarah Min

Analysts are looking closely at Disney's parks and experiences segment to gauge the company's stock outlook moving forward.

The entertainment giant reported an earnings and revenue beat before the bell Wednesday, but its U.S. theme parks business was weighed down by lower consumer demand and inflation. Disney's parks have been an important profit driver for the company.

Goldman Sachs analyst Michael Ng noted that the moderation in consumer demand should continue to impact Disney's experiences business over the next few quarters, alongside the Olympics at Disneyland Paris as well as cyclical weakness in China. "DIS could trade lower on the Experiences miss and more cautious forward commentary, which could be partly offset by the better-than-expected momentum in the film studio and DTC," he said.

Ng kept his buy rating and 12-month price target of $125, implying nearly 39% potential upside.

JPMorgan, meanwhile, reiterated its overweight rating and slightly more bullish price target of $135, mentioning that Disney lifted its FY24 earnings per share growth target by 5% to 30%. The firm still acknowledged that Disney expects its operating income from its experiences segment to decline mid-single digits year-over-year in the fourth quarter.

— Pia Singh

The market rebound continued for a second day on Wednesday, with a broad-based rally in the S&P 500. As of 10 a.m. ET, there were 462 stocks advancing in the broad market index.

Information technology and financials were the sector outperformers, up more than 2% and 1%, respectively. Communication services was the third best-performing sector, gaining1.8%.

On the other hand, health care was the biggest laggard, rising 0.3%.

— Sarah Min

The Japanese yen depreciated 2.04% at 147.28 per U.S. dollar Wednesday morning.

The yen is now down from its seven-month high of 141.675 from Monday, but is still up nearly 2% in August. Wednesday's fall against puts the yen on pace for its worst day against the dollar since Jun. 17, 2022, when it fell 2.09% against the dollar.

The Currency Shares Yen ETF (FXY) declined 1.75% for its largest daily fall since Feb. 3, 2023 when it lost 1.8%.

— Hakyung Kim, Gina Francolla

U.S. stocks began Wednesday's trading session in positive territory.

The S&P 500 advanced 1.1%, while the Nasdaq Composite gained 1.7%. The Dow Jones Industrial Average jumped 256 points, or 0.65.

— Hakyung Kim

Although the market has recovered from Monday's lows, it still lies in a "no-man's land" from last Thursday's lows, according to Strategas head of technical and macro research Chris Verrone.

The S&P 500 closed at 5,240 on Tuesday, which was higher than the low of 5,119 on Monday but below the 5,410 low seen on August 1.

Verrone wrote in a Wednesday note that he is "not blown away with the first bounce attempt from [the] S&P 500 yesterday,, as breadth cam in a tepid +2.6 to 1 advance/decline."

"Tread lightly with the first bounce attempt," said Verrone. Correction lows are likelier to occur in September or October rather than in August, he added.

"A bottoming sequence typically takes some time to come together, and we can't think of many correction lows in August," Verrone said.

— Hakyung Kim

Check out the companies making headlines before the bell.

• Disney — Shares were down about 1% after the media giant reported quarterly results that beat analyst expectations, thanks in part to strong performance at its streaming unit. The company earned $1.39 per share, excluding items, on revenue of $23.16 billion. Analysts expected a profit of $1.19 per share on revenue of $23.07 billion, per LSEG.
• Airbnb — Weaker-than-expected revenue guidance for the third quarter hurt Airbnb shares in the premarket, losing nearly 14%. The company sees revenue in a range of $3.67 billion to $3.73 billion. Analysts expected a forecast of $3.84 billion.
• CVS Health — Shares of the drugstore chain slipped just 0.3% after CVS Health reported second-quarter earnings that surpassed expectations but cut its full-year profit outlook due to the impact of higher medical costs. 

For the full list, read here.

— Pia Singh

Despite some weaker-than-expected economic data in recent weeks and market volatility sparking fears of a recession, UBS says the U.S. economy is still on pace for a soft landing.

Corporate profit margins remain strong, and consumer spending is normalizing from high levels, not deteriorating, the firm added. Solita Marcelli, chief investment officer Americas, also noted that earnings for S&P 500 companies are likely to grow by double-digit percentages this year.

To be sure, Marcelli said in a Wednesday note that "While the breadth of earnings beats is in line with historical averages, the magnitude of the beats is a bit below normal."

— Hakyung Kim

Weaker-than-expected revenue guidance for the third quarter hurt Airbnb shares in the premarket, losing 13%. The company sees revenue in a range of $3.67 billion to $3.73 billion. Analysts expected a forecast of $3.84 billion.

— Fred Imbert

Lyft shares were down more than 11% after the ride-hailing company issued disappointing third-quarter revenue guidance. Lyft sees revenue ranging between $90 million and $95 million, while analysts expected a forecast of $103.4 million, according to StreetAccount.

— Fred Imbert

Disney shares were up about 1% after the media giant reported quarterly results that beat analyst expectations.

The company earned an adjusted $1.39 per share on revenue of $23.16 billion. Analysts expected a profit of $1.19 per share on revenue of $23.07 billion, per LSEG. Operating income increased 19% year on year to $4.225 billion thanks in part to streaming.

— Fred Imbert

European markets opened higher on Wednesday, with the pan-European Euro Stoxx 600 adding 0.37% as of 8:23 a.m. London time.

Most sectors were last trading in the green. Banks rose 1.17%, while healthcare stocks shed 0.47%.

Bourses across the region also picked up, with the U.K.'s FTSE 100 adding 0.57%, Germany's DAX rising 0.27% and France's CAC 40 gaining 0.46%.

— Sophie Kiderlin

The Bank of Japan won't raise rates while markets are volatile, deputy governor Uchida Shinichi said in a speech Wednesday.

Japanese markets have whipsawed this week, seeing both their worst sell-off since the 1987 Black Monday crash as well as the best day since October 2008.

Uchida noted that unlike Europe or the United States, "Japan's economy is not in a situation where the Bank may fall behind the curve if it does not raise the policy interest rate at a certain pace."

"Therefore, the Bank will not raise its policy interest rate when financial and capital markets are unstable," he said.

— Christine Wang

U.S. stock futures reversed to trade higher as Asian stocks rose in morning trading.

Dow futures rose 219 points or 0.56% while S&P 500 futures rose 0.67%. Nasdaq 100 futures jumped 0.97%.

The benchmark Nikkei 225 in Japan rose 2%, while the broad-based Topix jumped 3%. The Japanese yen weakened against the dollar, trading around 146.

— Christine Wang

Check out the companies making headlines in extended trading.

• Airbnb — The online booking company plunged 13% after second-quarter earnings missed Wall Street estimates. Airbnb reported earnings of 86 cents per share, while analysts polled by LSEG were looking for 92 cents. The company also said it's seeing signs of slowing demand from its U.S. customers.
• Reddit — Shares ticked down 2% despite the company's second-quarter results beating Wall Street estimates on the top and bottom line. The social news company reported better-than-expected daily active user metrics. Reddit also issued its third-quarter revenue outlook, calling for $290 million to $310 million while analysts polled by LSEG called for $279 million.
• Wynn Resorts — The resort and casino operator added 2% despite posting disappointing second-quarter results. Wynn reported adjusted earnings of $1.12 per share on revenue of $1.73 billion, compared to an estimate from analysts polled by LSEG that expected $1.14 per share and $1.75 billion in revenue.

Read the full list here.

— Brian Evans