Investors sought clarity on the course of interest rates as US stock markets finished down on Thursday, after poor quarterly results from businesses such as Tesla and AT&T.
Tesla (TSLA.O) shares fell 9.7% after the electric car manufacturer reported its lowest quarterly gross margin in two years and indicated that price cuts would continue. AT&T (T.N.) stock fell 10.4% after the telecom provider fell short of market expectations for first-quarter revenue and free cash flow.
The S&P 500’s early-year rise will be put to the test by a first-quarter earnings season that investors predict to be disappointing. According to Refinitiv data, analysts have mainly maintained last week’s forecasts of a near-5% year-on-year decline in quarterly earnings at S&P 500 businesses.
“The market has been overbought for the last week or two,” said Anthony Saglimbene, chief market strategist at Ameriprise Financial. “Now that we are going to start the heart of earnings season, you are going to see that demand is slowing, corporate profits are coming down and there really isn’t a whole lot of catalysts to motivate buyers.”
The Dow Jones Industrial Average (.DJI) was down 110.39 points, or 0.33%, to 33,786.62, the S&P 500 (.SPX) was down 24.73 points, or 0.60%, to 4,129.79, and the Nasdaq Composite (.IXIC) was down 97.67 points, or 0.8%, to 12,059.56.
In other earnings news, American Express Co. (AXP.N) reported a profit that fell short of Wall Street expectations, causing its stock to fall 1%.
Following the findings, shares of numerous regional banks declined, including 2.7% declines for Comerica Inc. (CMA.N) and KeyCorp (KEY.N). Since the demise of Silicon Valley Bank last month, which prompted investor worries about systemic risks, regional banks have been in the spotlight.
[Traders on the floor of the New York Stock Exchange]
On April 19, 2023, traders work on the floor of the New York Stock Exchange (NYSE) in New York City, United States. AFP/Brendan McDermid
Lam Research (LRCX.O) jumped 7.2% as the chip-making equipment supplier’s sales exceeded expectations, while D.R. Horton (DHI.N) rose 5.6% after the homebuilder anticipated full-year revenue that exceeded expectations.
Investors are examining the course of interest rates, and many anticipate the Federal Reserve to begin decreasing rates later this year as the central bank juggles its battle against inflation. According to data, the number of Americans filing new jobless claims grew marginally last week, indicating that the labour market was steadily weakening.
Markets were focusing on a slew of Fed officials appearing at the end of the week ahead of the central bank’s meeting early next month, when a 25 basis point boost is generally expected.
Dallas Fed President Lorie Logan said that she is evaluating whether the Fed has made enough headway in combating inflation based on three indicators, including “further and sustained” improvement in inflation indices.
Worries were heightened when the cost of insuring exposure to US sovereign debt reached its highest level in almost a decade, as investors worried about discussions in Washington to extend the US government’s debt limit.
On the NYSE, decliners outweighed advancers by a 1.74-to-1 ratio; on the Nasdaq, decliners outpaced advancers by a 1.79-to-1 ratio.
The S&P 500 set 23 new 52-week highs and three new lows, while the Nasdaq Composite set 58 new highs and 134 new lows.
In the United States, around 9.9 billion shares changed hands, compared to the 10.5 billion daily average for the previous 20 sessions.