Wall St slides after gloomy earnings led by Tesla
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[April 21, 2023] By
Lewis Krauskopf, Sruthi Shankar and Ankika Biswas
(Reuters) - Major U.S. stock indexes ended lower on Thursday after
disappointing quarterly reports from companies including Tesla and AT&T,
while investors sought clarity on the path of interest rates.
Tesla shares tumbled 9.7% after the electric vehicle maker posted its
lowest quarterly gross margin in two years and signaled it would
continue to slash prices. AT&T shares dropped 10.4% after the wireless
carrier missed market estimates for first-quarter revenue and free cash
flow.
The S&P 500's rally to start the year is set to be tested by a
first-quarter earnings season that investors expect to show tepid
results. So far, analysts have largely retained last week's expectations
of a near-5% year-on-year fall in quarterly profits at S&P 500
companies, according to Refinitiv data.
“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.”
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The Dow Jones Industrial Average fell 110.39 points, or 0.33%, to
33,786.62, the S&P 500 lost 24.73 points, or 0.60%, to 4,129.79 and the
Nasdaq Composite dropped 97.67 points, or 0.8%, to 12,059.56.
In other earnings news, American Express Co profit missed Wall Street
estimates and its shares fell 1%.
Shares of several regional banks fell after results, including 2.7%
drops for both Comerica Inc and KeyCorp. Regional banks have been in
focus since the failure last month of Silicon Valley Bank raised
investor concerns about systemic risks.
Shares of Lam Research rose 7.2% after the chip-making equipment
supplier's revenue topped estimates, while shares of D.R. Horton
increased 5.6% after the homebuilder forecast full-year revenue above
estimates.
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Traders work on the floor of the New
York Stock Exchange (NYSE) in New York City, U.S., April 19, 2023.
REUTERS/Brendan McDermid
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Investors are assessing the path for interest rates, and many expect
a slowing U.S. economy could lead the Federal Reserve to start
cutting rates later this year as the central bank juggles its fight
against inflation. Data showed the number of Americans filing new
claims for unemployment benefits increased moderately last week,
suggesting the labor market was gradually slowing.
Markets were focused on a bevy of Fed officials speaking at the end
of the week ahead of the central bank's meeting early next month,
when investors widely expect a 25 basis point hike.
Dallas Fed President Lorie Logan said she is assessing whether the
Fed has made enough progress on fighting inflation based on three
markers, including "further and sustained" improvement in measures
of inflation.
Adding to worries, the cost of insuring exposure to U.S. sovereign
debt rose to the highest level in over a decade as investors fretted
about negotiations in Washington to raise the U.S. government debt
ceiling.
Declining issues outnumbered advancing ones on the NYSE by a
1.74-to-1 ratio; on Nasdaq, a 1.79-to-1 ratio favored decliners.
The S&P 500 posted 23 new 52-week highs and 3 new lows; the Nasdaq
Composite recorded 58 new highs and 134 new lows.
About 9.9 billion shares changed hands in U.S. exchanges, compared
with the 10.5 billion daily average over the last 20 sessions.
(Reporting by Lewis Krauskopf in New York, Sruthi Shankar and Ankika
Biswas in Bengaluru; Additional reporting by Vansh Agarwal; Editing
by Arun Koyyur, Vinay Dwivedi and David Gregorio)
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