US stocks dropped as Tesla Inc. and Apple Inc.’s demand issues bruised sentiment on Tuesday, with investors pondering how much pain is likely ahead for growth stocks and more broadly, the economy. Oil and copper remained under pressure from the strong dollar.
(Bloomberg) — US stocks dropped as Tesla Inc. and Apple Inc.’s demand issues bruised sentiment on Tuesday, with investors pondering how much pain is likely ahead for growth stocks and more broadly, the economy. Oil and copper remained under pressure from the strong dollar.
The S&P 500 and the Nasdaq 100 stayed lower for most of the session. A decline in the shares of Apple and Tesla continued to weigh on both indexes. Exxon Mobil Corp. also fell, dragging the S&P 500. The dollar rose the most in nearly three weeks.
Read More: Tesla Drops Most Since 2020 After Third Straight Deliveries Miss
In a departure from what stocks are doing on Tuesday, Treasuries rose, with yields declining across the curve. The 10-year yield dropped to around 3.77%, after falling to 3.72% earlier. Stocks and bonds could return to their old ways, with the latter serving as a hedge for risk exposure, according to most respondents of MLIV Pulse’s latest survey.
Investors, still cautious after their wagers missed the mark in 2022, expect a volatile year of trading as uncertainty about the US economy persists. Federal Reserve policy will dictate how stocks and bonds perform, with some traders already seeking out opportunities resulting from risk assets getting sold off.
Recession concerns continue to linger, with former New York Fed President William Dudley saying that an imminent slowdown won’t be severe while investors continue to mull how much Fed tightening will impact the economy. All eyes will be on the jobs report this week, as softening in the labor market remains the Fed’s focus.
“What worries the markets going into the year is how deep the recession is likely to be,” Sam Stovall, chief investment strategist at CFRA, said on Bloomberg Television. “I think very few people believe we will miss a recession altogether, especially when we have such an inverted yield curve and now are expected to fall into an earnings recession.”
Signs that Covid infections may have peaked in some of China’s biggest cities had buoyed sentiment earlier in the session. Stocks in China and Europe closed Tuesday’s session higher. The Stoxx Europe 600 Index and the Hang Seng Index notched gains of more than 1%.
However, China’s economy may not get the “outsized boost” people are expecting, Matt Maley, chief market strategist at Miller Tabak + Co., wrote in a note. Chris Senyek of Wolfe Research also isn’t bullish about China’s reopening.
“In our view, there’s still a massive amount of uncertainty there, and whenever growth does begin to re-accelerate, inflation headwinds are more likely than not to offset global growth tailwinds,” he said in a note.
Read More: China Vows to Hit Back at Nations Imposing Covid Travel Curbs
The main markets moves are:
Stocks
- The S&P 500 fell 1.1% as of 2:36 p.m. New York time
- The Nasdaq 100 fell 1.2%
- The Dow Jones Industrial Average fell 0.8%
- The MSCI World index rose 0.2%
Currencies
- The Bloomberg Dollar Spot Index rose 0.7%
- The euro fell 1% to $1.0559
- The British pound fell 0.6% to $1.1977
- The Japanese yen was little changed at 130.74 per dollar
Cryptocurrencies
- Bitcoin fell 0.8% to $16,620.74
- Ether fell 1% to $1,206.89
Bonds
- The yield on 10-year Treasuries declined 10 basis points to 3.77%
- Germany’s 10-year yield declined six basis points to 2.39%
- Britain’s 10-year yield declined two basis points to 3.65%
Commodities
- West Texas Intermediate crude fell 4.3% to $76.82 a barrel
- Gold futures rose 0.9% to $1,842.60 an ounce
This story was produced with the assistance of Bloomberg Automation.
–With assistance from Namitha Jagadeesh.
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