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Stocks far from lows as Tesla gains ahead of earnings: Markets unwind

(Bloomberg) — Stocks bounced off session lows well as banks rallied and Tesla Inc. erased losses ahead of its earnings report, with moves balancing gloomy sentiment with Microsoft Corp.’s dour sell warning. mitigated.

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Elon Musk’s electric-vehicle giant has erased a decline of up to 4% — and its results could add another dose of volatility. Options pricing suggests the stock could swing 11% either way after the report, which would be the largest such move since 2021, according to data compiled by Bloomberg. Most of the major groups in the S&P 500 still remained lower.

Fourth-quarter earnings for technology companies in the S&P 500 are expected to have fallen 9.2% from the year-ago period, the steepest decline since 2016, data from Bloomberg Intelligence showed. Three months ago, profits were flat.

“The push-and-pull of bulls and bears continues, with tech gains being the latest data point to energize the bears, although positive momentum, continued high skepticism about the rally and the attractiveness of multiple areas of the markets stocks could break the Upside potential,” said Mark Hackett, head of investment research at Nationwide.

According to Treasury Partners’ Richard Saperstein, investors should use rallies to reduce exposure to the stock market. The slower economic growth caused by the Fed’s tightening and its impact on corporate earnings will likely be priced into stocks over the next few months, he added.

“We have not been impressed with the quality of results over the last few weeks. Looking ahead, margins remain at risk as inflation eases and economic growth slows,” noted Saperstein.

The story goes on

Stocks’ recent rebound came at a time when the economy is headed for a downturn — which could set the stage for a sell-off, JPMorgan Chase & Co.’s Marko Kolanovic told CNBC. Kolanovic, one of Wall Street’s biggest optimists for most of last year, has since reversed his view and reduced his equity allocation in mid-December on a weak economic outlook.

In other company news, Boeing Co. reported a surprise loss through the end of 2022 — its sixth consecutive quarter of losses — as higher costs slowed the planemaker’s recovery, although a delayed spate of jet deliveries led to a surge in cash. AT&T Inc.’s 2023 earnings and free cash flow guidance missed analyst estimates as the wireless carrier invests in network improvements.

The New York Stock Exchange said a manual error caused wild price swings and trading halts for hundreds of company stocks at the market open on Tuesday.

The root cause of the problem, which the exchange operator says has been fixed, was linked to the company’s so-called “disaster recovery configuration” earlier in the day. Over 1,300 trades and about 84 stocks have been affected and marked as “abnormal,” the NYSE said in an updated statement on its website.

Elsewhere, the loonie fell as the Bank of Canada hiked rates for the eighth straight and possibly final hike — saying it expects to step to the sidelines and weigh the impact of its rapid tightening.

Read: Debt Ceiling Anxiety Tracker: What to be aware of as Crunch Time approaches

Traders also kept tabs on the latest geopolitical developments.

The US will send Ukraine 31 of its M1 Abrams main battle tanks, on top of a German commitment to supply some of its world-class armor and provide the country with an important new capability as it seeks to push Russian forces from the east.

Key Events:

  • Earnings for the week include: American Airlines, Blackstone, Comcast, Diageo, Intel, LVMH Moet Hennessy Louis Vuitton, Mastercard, SAP, Southwest Airlines, Visa (Thursday); American Express, Charter Communications, Chevron, HCA Healthcare (Friday)

  • US fourth quarter GDP, new home sales, initial jobless claims, Thursday

  • US Personal Income/Expenditure, PCE Deflator, University of Michigan Consumer Sentiment, Pending Home Sales, Friday

Some of the key movements in the markets:


  • The S&P 500 was down 0.3% as of 1:53 p.m. New York time

  • The Nasdaq 100 fell 0.7%

  • The Dow Jones Industrial Average fell 0.2%

  • The MSCI World Index has hardly changed


  • The Bloomberg Dollar Spot Index fell 0.3%

  • The euro rose 0.2% to $1.0912

  • The British pound rose 0.5% to $1.2398

  • The Japanese yen rose 0.5% to 129.49 per dollar


  • Bitcoin fell 0.9% to $22,698.03

  • Ether fell 2.8% to $1,554.43


  • The 10-year government bond yield was little changed at 3.45%.

  • Germany’s 10-year yield was little changed at 2.16%

  • The 10-year UK government bond yield fell three basis points to 3.24%

raw materials

  • West Texas Intermediate crude was up 0.5% to $80.52 a barrel

  • Gold futures rose 0.4% to $1,959.40 an ounce

This story was created with the support of Bloomberg Automation.

–Assisted by Peyton Forte, John McCorry, Vildana Hajric and Isabelle Lee.

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