Apple hits its lowest level since June 2021, Tesla slips on missed Q4 deliveries
Major Wall Street indexes pushed lower on Tuesday as Investors weighed the potential pain ahead for growth stocks, with significant losses in Tesla and Apple pulling down major indexes on the first trading day of 2023. The dollar increased the highest in almost three weeks while Treasuries reversed earlier gains.
Tesla Motors Inc. (TSLA.O) is down 13.7% after missing Wall Street expectations for quarterly deliveries, and Apple Inc. (AAPL.O) saw a 3.9% decline to its lowest level since June 2021 as a result of a rating downgrade brought on by Chinese production curbs.
Investors will closely follow the minutes of the Fed’s policy meeting in December when the Fed hiked interest rates by 50 basis points after four consecutive increases of 75 bps and indicated that they would stay higher for longer.
This week’s economic data also includes the ISM manufacturing survey and the employment report for December.
Although the evidence so far indicates that the labour market stays strong despite interest rate rises, the Fed may have cause to loosen its monetary policy if the labour market were to weaken.
Money market participants predict that the benchmark rate will increase by 25 basis points to 4.50%–4.75% in February, reaching at 4.98% by June, with a 68% likelihood that the Fed will do so.
"To get services inflation in check, Fed officials need to drive wage inflation down to a range of 3% to 4%. This will require a persistent string of payroll gains of less than 100,000 per month" & a rise in jobless rates to at least 4.5-5%: Bill Dudley https://t.co/4f5ZlFoJRD
— Lisa Abramowicz (@lisaabramowicz1) January 3, 2023
Major stock indices concluded 2022 with their worst year of losses since 2008, with the S&P 500 losing 19.4%, resulting in a market capitalization fall of around $8 trillion. Growth stocks also contributed to the Nasdaq’s decline of 33.1%.
The market turmoil has been mainly attributed to the Fed’s fastest rate-hike cycle since the 1980s, on the back of raising inflation not seen in decades.
Former New York Fed President William Dudley stated that a forthcoming slowdown in the economy won’t be severe, but investors are still debating the extent to which the Fed’s continued tightening would affect the economy and potentially cause a recession.
Meanwhile gold and silver are starting the new year in a position of strength, with safe-haven demand boosted by technical buying and bullish charts. Gold reached a six-month high and silver reached an eight-month high.
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