U.S. stocks slid Tuesday in a downbeat start to a busy first trading week of 2023.
The S&P 500 (^GSPC) dropped to a session low of around 1% at noon after opening higher, while the Dow Jones Industrial Average (^DJI) fell more than 200 points, or 0.7%. The technology-heavy Nasdaq Composite (^IXIC) tumbled 1.3%.
Apple (AAPL) shares sank 4.1% on Tuesday, bringing the company’s market capitalization below $2 trillion — a symbolic milestone for the tech stock rout that wiped more than $3 trillion off the value of U.S. megacap giants last year.
Tesla (TSLA) also continued a downslide to start the new year, plunging as much as 13% — its biggest drop since September 2020 — after the electric carmaker on Monday reported vehicle production and delivery figures for fourth quarter that missed Wall Street’s estimates.
Adding to selling pressures, JPMorgan analyst Ryan Brinkman cut his profit estimates and price target on the stock on the heels of those results.
The company closed out its worst year on record in 2022, shedding 65%, or about $700 billion in market value. In December, growing concerns around production delays in China and CEO Elon Musk’s management of Twitter drove the stock down 36%, its biggest monthly drop since Tesla went public in 2010.
In other stock moves, Block (SQ) shares rose 2% following an upgrade from Baird analysts to Outperform, with a new price target of $78 per share, up from the prior $62.
Meanwhile, optimism around China’s recovery after researchers in Shanghai reported COVID cases in major Chinese cities may have peaked helped boost sentiment Tuesday morning.
Shares of Chinese companies trading on U.S. exchanges pushed forward, with Alibaba Group (BABA) and Baidu (BIDU) each rising at least 4% despite declines in the broader market.
The moves Tuesday come after broad-based declines on Friday in a fitting end to Wall Street’s worst year since the Global Financial Crisis in 2008. U.S. stock and bond markets were closed on Monday in observance of New Year’s Day.
The S&P 500 tumbled 19.4% in 2022, while the Nasdaq Composite wiped out one-third of its value, dropping 33% and closing out its first four-quarter decline since the 2000 dot-com bubble. The Dow fell a comparably modest 9%, holding up better than its index peers but still capping a three-year winning streak for the major averages.
A new year may not be a fresh start for investors, with strategists warning that many of the headwinds that plagued markets in 2022 will persist into the new year: inflation, continued monetary tightening by the Federal Reserve, and the risk of a hard landing as further rate hikes permeate the U.S. economy.
“The story in 2022 was the Fed hiking interest rates and choking off the equities and bond markets, and by indication a bunch of other markets in the process as well,” Opimas CEO Octavio Marenzi told Yahoo Finance Live on Friday, adding that market expectations for a terminal rate of 5% were “mindlessly optimistic.”
“I don’t think the peak interest rate is only 75 basis points away if you look at where inflation is,” Marenzi said. “I think there’s more pain to come in 2023 – I think basically we’re going to see a replay of 2022 – the same kind of pressures, the same direction.”
Economic data will pick up in the shortened first trading week of the year, with the Labor Department set to release its first jobs report of 2023 Friday morning. Economists expect a payroll gain of 200,000 jobs for December, per Bloomberg consensus estimates. Investors will get three additional updates on the labor market, with the latest Job Openings and Labor Turnover Survey (or JOLTS report), ADP’s private payrolls data, and the Challenger Job Cuts report all due out.
Investors will also tune in for the Fed’s release of minutes from its December policy meeting, which investors will pore over for clues on the central bank’s next move.
In other markets early Tuesday, U.S. Treasury yields retreated. In 2022, the yield on the benchmark 10-year note surged from around 1.5% at the beginning of the year to settle at 3.88% on Friday.
Oil prices slumped, with West Texas Intermediate (WTI) crude futures falling 1.7% to trade just below $79 per barrel. Meanwhile, the U.S. dollar index gained Tuesday morning.
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Alexandra Semenova is a reporter for Yahoo Finance. Follow her on Twitter @alexandraandnyc
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Source: https://finance.yahoo.com/news/stock-market-news-live-updates-january-3-2023-111400576.html