Smallcap outperformance continues on Wall Street as tech sell-off gathers speed

Benchmark indices on Wall Street had a volatile but weak session as investors continued to rotate out of tech shares to economically sensitive and smallcap tocks.

The Dow Jones, after a very volatile session, ended with losses of 40 points. At the day's low, the index was down 300 points. The S&P 500 fell 0.5%, while the Nasdaq ended 1% lower. However, 300 stocks on the S&P 500 ended higher, indicating positive market breadth.

Smallcap stocks continued to move higher with the Russell 2000 index outperforming the S&P 500 for the ninth session in a row, a streak last witnessed in 1990.

Among the big bank results on Wednesday, Wells Fargo fell over 4% after missing estimates on the profitability front, while Bank of America fell over 3% as its outlook on expenses offset an otherwise good quarter. Citigroup also saw shares fall as top executives tempered analysts' exuberance over meeting key regulatory requirements and reducing expenses.

"Expectations for this earnings season are very high,” said Matt Maley at Miller Tabak. “If those expectations are not met in today’s stock market — which is priced for perfection — it’s going to create some headwinds."

The US Supreme Court also offered no decision on US President Donald Trump's tariff policies, leaving it to next week yet again.

Among macro indicators, retail sales for November, which was a delayed print, rose by the most since July, led by auto purchases and resilient shopping during the holiday season. Wholesale inflation rose slightly even as services prices were unchanged.

Beyond equities, Gold prices are wavering above the $4,600 an ounce mark, while Silver now trades above the $91 an ounce level with prices on the Shanghai Futures exchange even crossing $100 at one point on Wednesday. Brent crude remains above $66 per barrel.

Big Bank earnings continue on Wall Street later today with Morgan Stanley and Goldman Sachs reporting, along with names like TSMC, and BlackRock, the world's largest asset manager.

(With Inputs From Agencies)