Tesla pushed the Nasdaq lower ahead of tech earnings and economic data

April 24 (Reuters) – The Nasdaq led Wall Street’s losses on Monday as Tesla shares came under pressure on the company’s plans to increase spending, while investors await major company results and key economic data this week.

Tesla Inc (TSLA.O) fell 3.4% after the automaker raised its 2023 capital spending forecast to boost production, weighing on discretionary consumer inventories (.SPLRCD).

Alphabet Inc (GOOGL.O), Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O), and Meta Platforms Inc (META.O), which make up more than 14% of the value of the S&P 500 (.SPX) benchmark , to report the results this week.

The rally in these stocks has supported Wall Street this year, and investors are waiting to see if the gains can continue amid the bleak economic outlook.

“It’s a make or break week for (technology) stocks, if earnings don’t disappoint, the market can continue higher,” said Peter Cardillo, chief market economist at Spartan Capital Securities in New York.

US stocks held largely flat during the start of the earnings season on the back of stronger-than-expected results from major banks, allaying concerns about contagion from the banking crisis in March.

Of the 90 S&P 500 companies that have reported first-quarter results so far, roughly 77% have topped analyst earnings estimates, according to Refinitiv IBES data. The average long term batting average is 66%.

Earnings expectations also improved marginally, with analysts expecting quarterly earnings to contract by 4.7% versus the 5.1% decline expected at the start of April.

Among the data due to be released this week are early readings of US GDP for the first quarter, personal consumption expenditure (PCE) for March, and consumer confidence numbers for April.

Last week’s mixed economic numbers boosted bets for a 25 basis point rate hike by the Federal Reserve in May, with money market traders pricing a 92% chance of such a move, according to CME Group’s Fedwatch tool.

Most Fed policymakers have acknowledged over the past week that the central bank has more work to do to bring down inflation, before entering a period of obfuscation until the next policy meeting.

US Treasury yields fell after recent signs of slowing inflation and economic activity, although investors appeared increasingly concerned about a potential showdown over the US debt ceiling.

US House of Representatives Speaker Kevin McCarthy said the House of Representatives will vote on the spending and debt bill this week amid persistent concerns that the US government may hit its debt ceiling sooner than expected.

At 11:44 a.m. ET, the Dow Jones Industrial Average (.DJI) was down 52.81 points, or 0.16%, at 33,756.15, the S&P 500 (.SPX) was down 12.52 points, or 0.30%, at 4,121.00, and the Nasdaq The Composite Index (.IXIC) declined 98.14 points, or 0.81%, to 11,974.32 points.

Defense Healthcare (.SPXHC), Utilities (.SPLRCU) and Basic Consumer Goods (.SPLRCS) were among the rare gainers.

First Republic Bank (FRC.N) gained 6.3% ahead of its quarterly report. Shares of the regional bank have fallen 88% this year due to the US banking crisis.

Declining issues outnumbered gainers by 1.05 to 1 on the NYSE and 1.75 to 1 on the Nasdaq.

The S&P posted 17 new 52-week highs and two new lows, while the Nasdaq posted 52 new highs and 139 new lows.

Reporting by Sruthi Shankar in Bengaluru, Editing by Vinay Dwivedi

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