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U.S. stocks trade lower as Tesla, energy shares drag down equities


U.S. stocks were lower on Thursday, with energy shares and Tesla Inc.’s stock in focus after the electric-vehicle marker’s shares slumped nearly 8%.

How are stocks trading
  • The S&P 500
    SPX,
    -0.43%

    dipped 17 points, or 0.4%, to 4,137.

  • The Dow Jones Industrial Average
    DJIA,
    -0.26%

    fell 81 points, or 0.2%, to 33,814.

  • The Nasdaq Composite
    COMP,
    -0.37%

    slid 44 points, or 0.4%, to 12,111.

On Wednesday, the Dow fell 80 points, or 0.2%, while the S&P 500 shed less than 0.1% and the Nasdaq Composite ended fractionally higher.

What’s driving markets

Sentiment was hit by a sharp slide in shares of Tesla Inc.
TSLA,
-8.90%

after CEO Elon Musk suggested he was prepared to boost market share at the expense of profit margins as the company reported its results for the quarter ended in March.

Tesla’s troubles are just the latest example of how a lackluster start of earnings season has helped to dampen some of investors’ enthusiasm for U.S. stocks.

“The last few days household-name companies have disappointed, be it Tesla, Netflix and Goldman Sachs,” said Art Hogan, chief market strategist at B.Riley Wealth, during a phone interview with MarketWatch.

So far, results have put a splotlight on the waning ability of the U.S. consumer to continue propping up the U.S. economy.

“The main takeaway from earnings season so far is that consumer demand is weakening,” said Robert Schein, chief investment officer at Blanke Schein Wealth Management.

European carmakers stumbled, hurting benchmarks like Germany’s DAX 40 index
DAX,
-0.62%
,
while U.S. stock futures also took a hit. Shares of Ford Motor
F,
-3.72%

and General Motors
GM,
-3.56%

were lower in U.S. trade.

The news reminded investors of potential dangers lurking within the unfolding first-quarter earnings season.

Another batch of companies presented earnings on Thursday including AT&T Inc.
T,
-9.55%
,
Comerica Inc.
CMA,
-2.76%
,
Fifth Third Bancorp
FITB,
-0.41%
,
Union Pacific Corp.
UNP,
+0.72%
,
Phillip Morris International Inc.
PM,
-4.63%

and American Airlines Group Inc.
AAL,
-1.58%
.
The regional banks shares retreated as lost deposits weighed on corporate earnings.

Intraday wobbles aside, U.S. equity benchmarks have moved little of late as traders wait to see if the S&P 500 can burst out of its five-month trading channel between 3,800 to 4,200.

“U.S. equity markets are firmly bottled up within the range and showing no momentum,” said the strategy team at Saxo Bank. Meanwhile, the Cboe Volatility Index
VIX,
+2.55%
,
or VIX, known as Wall Street’s “fear gauge,” was at 17 in recent trade, up slightly on the day but still not far from its lowest level of the year, reached earlier this week.

Adding to the caution are lingering concerns that tighter central bank policy will crimp growth, according to some analysts.

As far as new economic numbers go, investors received weekly jobless-claim data on Thursday, which showed applications for unemployment benefits rose by more than expected to 245,000. Meanwhile, the Philadelphia Fed said Thursday its gauge of regional business activity slumped to negative 31.3 in April from negative 23.2 in the prior month. 

March existing home sales offered more dismal news about the U.S. housing market as sales fell by nearly 1% last month, the largest year-over-year decline in a decade. A gauge of leading economic indicators signaled a recession would likely arrive in the U.S. by mid-year.

And there’s a batch of Fed speakers, too. Fed Gov. Christopher Waller will make comments at noon ET; Cleveland Fed President Loretta Mester will talk at 12:20 p.m.; the Dallas Fed listens event with Dallas Fed President Lorie Logan and Fed Governor Michelle Bowman will begin at 3 p.m.; and Atlanta Fed President Raphael Bostic will speak at 5 p.m.

The latest economic data seems to be breaking the Federal Reserve’s way, with cooling of both inflation and the labor market, New York Fed President John Williams said late on Wednesday.



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