(New York) The New York Stock Exchange ended its first session of 2023 in the red, continuing the gloomy trend of the end of the previous year, weighed down in particular on Tuesday by the fall in shares of Tesla and Apple. .
The Dow Jones index fell 0.03% to 33,136.37 points, the tech-heavy NASDAQ lost 0.76% to 10,386.98 points and the S&P 500 fell 0.40 % at 3824.14 points, according to the final results.
Wall Street had briefly started the session higher after a long New Year’s weekend, looking set to rebound from the worst year since 2008 for the stock market.
But equities could not maintain this positive momentum, “as the restrictive policy” of the American central bank (Fed) “and fears of recession remained at the center of the concerns of investors”, commented Edward Moya, analyst at ‘Oanda.
The hunt for bargains, motivated at the start of the session by low share prices, fizzled out and “it is too early to start betting on a change in attitude from the Fed this year”, continued this analyst. “It will make the environment difficult for equities” at the start of the year, he added.
Bond yields, which had ended 2022 at 3.87% for 10-year US Treasuries, fell sharply to 3.76% as of 4:30 p.m. EST. .
The gloomy mood of traders focused on Tesla stock, which again fell drastically to reach a new low since August 2020.
The title of the manufacturer of electric vehicles, which has already melted by 65% last year, lost another 12.24%, ending at 108.10 dollars.
The action was sharply punished as the Elon Musk-led group announced disappointing deliveries for the whole of last year on Monday.
The brand delivered 1.31 million electric vehicles in 2022, which is a record and a 40% year-on-year jump, but it remains below its own forecasts and Wall Street expectations.
“Fourth-quarter figures missed target due to continued logistics issues, demand concerns and increased competition from other manufacturers,” Schwab analysts said.
In the last quarter alone, deliveries stood at 405,000 vehicles (+18%), while analysts expected 418,000.
A JPMorgan analyst further downgraded its earnings projections for the final quarter as well as the full year 2023, further depressing the stock.
Apple also made a bad impression, beating the NASDAQ, while the title of the firm at the apple fell 3.74% to 125.07 dollars.
As a result, the valuation of this mega-capitalisation of the technology sector, which had exceeded 3 trillion dollars at the start of 2022, fell back below 2 trillion dollars for the first time since last May. The title meanwhile is at its lowest since June 2021.
Apple seems to be facing delays in the delivery of its iPhone 14 Pro made in China.
Investors are also concerned about rising interest rates, which may weigh on the cost of the manufacturer’s investments.
A large half of the S&P sectors ended in the red, led by energy (-3.62%) which followed the sharp decline in crude oil prices, due to concerns about energy demand in the world as the spread of COVID-19 puts China’s economic reopening at risk.
Spared, the communication sector was on the rise, with in particular a jump of 3.66% from Meta, the parent company of Facebook.
On Wednesday, the General Electric conglomerate will ratify the split of its health branch GE HealthCare and introduce it on the stock market.
Investors will also watch for the minutes of the Fed’s latest monetary meeting.
The Toronto Stock Exchange
The Toronto Stock Exchange closed the first session of the year up 0.3% on Tuesday, as losses in the energy sector were offset by gains in several other sectors, while major U.S. indices ended the day down slightly.
The day had started out strong on both sides of the border, but the tide quickly turned and things stabilized in the afternoon.
The Toronto Stock Exchange’s S&P/TSX Composite Index rose 58.85 points to close with 19,443.77 points.
The themes that drove markets in the second half of 2022 haven’t gone away with the change in timing, observed Allan Small, senior investment advisor at iA Private Wealth Management.
“Right now, the path of least resistance seems to be on the negative side. And that’s what we see,” he said.
Investors are essentially in wait-and-see mode for new data that could help provide insight into central bank moves in the first half of 2023, he continued.
All eyes will be on the U.S. Federal Reserve, which will release the minutes of its December policy meeting on Wednesday, along with U.S. and Canadian jobs data, to come later in the year. week, explained Mr. Small.
The trend that bad news is actually good news when it comes to economic data will continue into 2023, Small said. So if the jobs data is weaker, markets will see it as a positive sign that interest rate increases will likely continue to slow.
In the currency market, the Canadian dollar traded at an average rate of 73.22 cents US, down from 73.83 cents US on Friday.
On the New York Commodities Exchange, crude oil returned US$3.33 to US$76.93 a barrel, while natural gas fell 49 cents US to US$3.99 per million of BTUs.
While oil prices can have a major effect on the TSX – on Tuesday the energy index fell 5.82% – other major sectors like industrials, utilities and finance helped push the index forward, Small said.
Oil prices have recently been sensitive to any news from China about its reopening and its rise in COVID-19 cases.
Mr Small thinks oil prices will begin to rise again in the new year, which he finds worrying because oil prices are a big contributor to inflation that central banks cannot influence.
“If we see oil prices starting to rise, as China starts to gain a foothold and bring in a lot more energy […] I think we might have a hard time trying to get inflation to slow down from what we have today,” he argued.
The Canadian Press