- Tesla steps back from higher spending forecasts for 2023
- First Republic Bank jumps ahead of quarterly results
- The US House of Representatives is scheduled to vote on the Republican debt limit bill this week
- Indices down: Dow 0.16%, S&P 0.30%, Nasdaq 0.81%
April 24 (Reuters) – The Nasdaq led losses on Wall Street on Monday as Tesla shares came under pressure on the company’s plans to increase spending, while investors this week are looking to the results of megacap- Companies and important economic data were waiting.
Tesla Inc (TSLA.O) fell 3.4% after the automaker raised its 2023 investment forecast to boost production, which weighed on consumer discretionary (.SPLRCD) stocks.
Alphabet Inc (GOOGL.O), Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O), and Meta Platforms Inc (META.O), which account for more than 14% of the value of the benchmark S&P 500 (.SPX ), are due to release results this week.
A rally in these stocks has been supportive of Wall Street this year, and investors are waiting to see if gains can continue given the bleak economic outlook.
“It’s a make-or-break week for (technology) stocks. If earnings don’t disappoint, the market can keep going higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.
US equities were broadly stable into the start of the earnings season as better-than-expected results from the big banks and concerns of contagion from the March banking crisis were allayed.
Of the 90 S&P 500 companies that have reported first-quarter results so far, nearly 77% have beaten analysts’ earnings estimates, according to data from Refinitiv IBES. The long-term average hit rate is 66%.
Earnings forecasts have also improved marginally, with analysts expecting a 4.7% quarterly earnings decline versus a 5.1% drop estimated in early April.
Data slated for release this week includes early readings of US GDP for the first quarter, the Personal Consumer Expenditure (PCE) index for March and consumer confidence numbers for April.
Mixed economic data last week reinforced bets on a 25 basis point Fed rate hike in May, with money market traders pricing in a 92% chance of such a move, according to CME Group’s Fedwatch tool.
Most Fed policymakers conceded last week that the central bank still needs to do more to bring down inflation before entering the blackout period until the next policy meeting.
US Treasury yields eased after recent signs of slowing inflation and economic activity, although investors appeared increasingly concerned about a possible standstill on the US debt ceiling.
Kevin McCarthy, Speaker of the US House of Representatives, said the House of Representatives will vote on its spending and debt bills this week amid ongoing concerns that the US government could hit its debt ceiling sooner than expected.
At 11:44 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 52.81 points, or 0.16%, to 33,756.15, the S&P 500 (.SPX) was down 12.52 points, or 0.30% 4,121.00 and the Nasdaq Composite (.IXIC) fell 98.14 points, or 0.81%, to 11,974.32.
Rare winners included the defensive healthcare (.SPXHC), utilities (.SPLRCU) and consumer staples (.SPLRCS) sectors.
First Republic Bank (FRC.N) gained 6.3% ahead of its earnings report. Shares in the regional bank have fallen 88% this year, triggered by the US banking crisis.
Declining issues outperformed the climbers with a 1.05 to 1 ratio on the NYSE and a 1.75 to 1 ratio on the Nasdaq.
The S&P index posted 17 new 52-week highs and two new lows, while the Nasdaq posted 52 new highs and 139 new lows.
Reporting by Sruthi Shankar in Bengaluru Editing by Vinay Dwivedi
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