Nasdaq 100, Dow Jones, S&P 500: Mixed Earnings Results Weigh on Wall Street Amid Slowing Economy

Highlights

• Tesla’s disappointing results drag down tech stocks and market
• AT&T and American Express miss estimates
• Data signals slowing economy; Energy sector weakens on demand concerns

Overview

Wall Street is lower on Thursday after a slew of corporate earnings reports yielded mixed results. The markets were especially impacted by disappointing results from Tesla. Investors also assessed fresh data that signaled a contracting economy.

Shortly after the mid-session, the blue chip Dow Jones Industrial Average is trading at 33717.36, down 179.65 or -0.53%. The benchmark S&P 500 Index is at 4121.30, down 33.22 or -0.80% and the tech-weighted NASDAQ Composite is trading 12043.54, down 113.68 or -0.94%.

Tesla’s Profit Margin Concerns Weigh on Tech-Weighted NASDAQ

Tesla’s decision to cut prices on some of its cars during the recent quarter led to mounting concerns over downward pressure on profit margins, resulting in a more than 20% decline in net income from a year ago. As a result, Tesla’s shares fell by over 10%, and other technology stocks, including Nvidia, Microsoft, and Rivian Automotive, also experienced a decline in their stock prices. Seagate Technology shares fell by 8% due to missing estimates and weak demand.

Falling Oil Prices Pressure Energy Shares

Energy was also a weak area in the market, with oil prices declining by approximately 2%. APA, Marathon Oil, and ConocoPhillips were among the laggards. Disappointing results from AT&T and American Express did little to ease the market’s concerns. The payments company lost about 2% as its earnings per share fell short of estimates, while AT&T fell by 10% on fears of slowing subscriber growth. These developments have contributed to the market’s overall weakness.

Investors Anticipate Decline in Earnings

As of Thursday, FactSet data indicates that roughly 16% of companies in the S&P 500 have released their earnings results, with approximately 76% of them exceeding EPS expectations. Nevertheless, many Wall Street investors are anticipating a decline in earnings this season. The lack of profit forecasts has raised concerns among some investors.

Upcoming Tech Earnings to Impact NASDAQ

The upcoming week will be a real test as major technology companies announce their earnings results. If the guidance provided next week results in a decline in the market, it could cause a contraction in multiples and lead to a sell-off in the S&P 500. Currently, the markets have been trading sideways despite concerns over the economic slowdown, fears of a banking crisis that shook the broader financial sector last month, and incoming economic data.

Data Suggests Contracting Economy

In other news, economic data released recently suggests that the economy is contracting, potentially indicating a bigger slowdown than initially anticipated. The Philadelphia Fed manufacturing index declined more than anticipated to reach its lowest point since May 2020, while jobless claims increased from the previous week.

In addition, Thursday was a busy day for central bank speakers ahead of the Fed’s May policy meeting. Cleveland Fed President Loretta Mester stated that higher interest rates may be on the horizon.

For a look at all of today’s economic events, check out our economic calendar.