Tech-Led Slide Fades; Tesla Whipsaws on Earnings: Markets Wrap

Tech-Led Slide Fades; Tesla Whipsaws on Earnings: Markets Wrap

(Bloomberg) -- Wall Street shook off most of the losses driven by a dire sales warning from Microsoft Corp., with stock traders shifting their focus to Tesla Inc.’s earnings report after the closing bell.

Most Read from Bloomberg

The S&P 500 almost erased a slide that topped 1.5% earlier in the day. In late trading, Elon Musk’s electric-vehicle giant whipsawed as it beat estimates on profit and sales, but missed on cash flow. International Business Machines Corp. delivered an upbeat annual sales forecast while announcing it would eliminate about 1.5% of its global workforce, following similar job cuts by many of its tech peers.

“The push-and-pull of bulls and bears continues, with technology earnings the latest data point to energize the bears, though the positive momentum, continued heavy skepticism of the rally and the attractiveness of several areas of the markets could break equities out to the upside,” said Mark Hackett, chief of investment research at Nationwide.

US stocks are headed for their best January since 2019 driven by expectations that the Federal Reserve will moderate its rate hikes. The equity rebound came just as the economy is headed for a downturn — setting the stage for a selloff, JPMorgan Chase & Co.’s Marko Kolanovic told CNBC.

Investors should use any rallies to reduce exposure to the equity market, according to Richard Saperstein at Treasury Partners. Slower economic growth caused by the Fed’s tightening and its impact on corporate earnings will likely be priced into stocks over the next several months, he added.

“We have not been impressed with the quality of earnings in recent weeks. Looking forward, margins remain at risk as inflation softens and economic growth slows,” Saperstein noted.

In other corporate news, AT&T Inc. rallied after beating analysts’ profit estimates even as the company’s 2023 outlook came up short of Wall Street targets. Boeing Co. reported a surprise loss to end 2022 — its sixth straight money-losing quarter — as higher costs slowed the planemaker’s recovery even though a late flurry of jet deliveries drove a surge in cash.

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

The root cause of the issue, which the exchange operator says has been resolved, was tied to the company’s so-called “disaster recovery configuration” at the start of the day. Over 1,300 trades and some 84 stocks were impacted and marked as “aberrant,” NYSE said in an updated statement on its website.

Elsewhere, the loonie fell as the Bank of Canada raised rates for an eighth consecutive and potentially final time — saying it expects to move to the sidelines and weigh the impact of its rapid tightening.

Traders also kept an eye on the latest geopolitical developments.

The US will send Ukraine 31 of its M1 Abrams battle tanks, adding to a German commitment to supply some of its top-line armor and infusing the country with a major new capability as it looks to pry 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/spending, PCE deflator, University of Michigan consumer sentiment, pending home sales, Friday

Some of the main moves in markets:

Stocks

  • The S&P 500 was little changed as of 4 p.m. New York time

  • The Nasdaq 100 fell 0.3%

  • The Dow Jones Industrial Average was little changed

  • The MSCI World index was little changed

Currencies

  • The Bloomberg Dollar Spot Index fell 0.3%

  • The euro rose 0.2% to $1.0913

  • The British pound rose 0.5% to $1.2396

  • The Japanese yen rose 0.4% to 129.60 per dollar

Cryptocurrencies

  • Bitcoin rose 0.1% to $22,928.84

  • Ether fell 1.3% to $1,578.92

Bonds

  • The yield on 10-year Treasuries was little changed at 3.45%

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

  • Britain’s 10-year yield declined three basis points to 3.24%

Commodities

  • West Texas Intermediate crude rose 0.5% to $80.56 a barrel

  • Gold futures rose 0.6% to $1,963.50 an ounce

This story was produced with the assistance of Bloomberg Automation.

--With assistance from Peyton Forte, John McCorry, Vildana Hajric and Isabelle Lee.

Most Read from Bloomberg Businessweek

©2023 Bloomberg L.P.