4/3/2024

Tesla shares fall, indices decline

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ХОЧЕШЬ УЗНАТЬ КАК ЗАРАБАТЫВАТЬ НА НОВОСТЯХ?

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Key points:

  • The Dow Jones, S&P 500 and Nasdaq Composite indices fell, with Tesla shares falling 4.9%.
  • The 10-year US Treasury yield is rising.
  • Investors are forecasting two rate cuts in 2024.

The American stock market declined again on Tuesday. Investors were cautious about the likelihood of the Federal Reserve delaying interest rate cuts. At the same time, Tesla shares fell significantly in price after the publication of a quarterly report, which for the first time in almost four years recorded a decline in the volume of deliveries of electric vehicles.

The Dow Jones Industrial Average lost 396.61 points, or 1%, to 39,170.24. The S&P 500 fell 37.96 points, or 0.72%, to 5,205.81. The Nasdaq Composite Index fell 156.38 points, or 0.95%, to 16,240.45.

Tesla shares pulled indices down

During trading on Tuesday, Tesla shares fell 4.9%, which was one of the most significant falls among companies included in the S&P 500 and Nasdaq indices.

Among other outsiders of the day were shares of companies in the healthcare sector. UnitedHealth, CVS Health and Humana saw sharp price declines following the US government’s decision to keep reimbursement rates unchanged for Medicare Advantage providers.

Shares of PVH Corp, the parent company of Calvin Klein, also showed a significant drop (by 22.2%). This comes after the retailer published a forecast that revenue in the first quarter could decline by about 11%.

Trading volume on US exchanges amounted to 11.12 billion shares, slightly below the average for the last 20 trading days (11.87 billion).

Strong economic data raises doubts about rate cuts

With the 10-year US Treasury yield rising to its highest level since late November, investor caution is growing. This is due to doubts about the possibility of realizing the Fed’s forecast of three rate cuts during the year.

Economic data released Tuesday added to those doubts. Thus, new orders for American-made goods grew more than expected in February, and the number of vacancies in the United States remained at a high level.

In this regard, the market has adjusted its expectations: investors are now forecasting two rate cuts in 2024 instead of three, as previously assumed.

Fed officials speaking on Tuesday confirmed that the central bank is in no hurry to cut rates. San Francisco Fed President Mary Daly warned against a premature reduction, which could lead to inflation consolidating at high levels. Cleveland Fed President Loretta Mester, in turn, said that easing monetary policy is possible as early as the June Fed meeting, but subject to favorable economic data.

Final clarity regarding the Fed’s further actions may be provided by data on employment in the US non-farm sector, which will be published on Friday.

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