Stocks Selloff Returns as Traders Lose Their Nerve: Markets Wrap

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Stocks Selloff Returns as Traders Lose Their Nerve: Markets Wrap


(Bloomberg) — An early rally in equities collapsed and major US benchmarks looked poised to extend a selloff that shaved more than a trillion dollars from share prices over the last four sessions. Tesla Inc.’s post-Christmas slump swelled to nearly 20% after its annual vehicle sales dropped.

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Treasury yields drifted higher, pushing 10-year rates about 20 basis points above the level prior to Jerome Powell’s hawkish turn at a Dec. 18 Federal Reserve meeting. Big moves have proliferated across asset classes after Powell’s board expressed waning enthusiasm for interest rate cuts. The Cboe Volatility Index climbed for the fourth time in five days.

Among individual stocks, Tesla was the worst performer, tumbling 6.9% after the electronic vehicle-marker’s fourth-quarter deliveries missed estimates and annual sales dropped for the first time in over a decade.

This year will be a “show-me year” for corporate earnings, according to Lisa Shalett at Morgan Stanley Wealth Management. As for the grim end to 2024, it’s “too soon to call it a bad omen,” she told Bloomberg Television.

Treasuries erased an early advance after a reading of weekly jobless claims fell to an eight-month low. A Bloomberg gauge of the dollar’s strength traded at a more than two-year peak.

Goldman Sachs economists led by Jan Hatzius noted that “seasonal adjustment challenges can make jobless claims readings particularly volatile around the holiday season.”

US stocks were straining to snap a losing streak that took some shine off the S&P 500’s best two-year run dating back to the late 1990s. The index has surged more than 50% since the start of 2023, driven by gains in the tech megacaps amid enthusiasm about the boost to profits from artificial intelligence.

“At the beginning of the year, analysts tend to be pretty optimistic — you have pretty robust year-on-year earnings forecasts,” Daniel Morris, chief market strategist at BNP Paribas Asset Management, said on Bloomberg Television. “Even if we don’t quite get say 20% earnings growth for Nasdaq, the way analysts might suggest, if it’s only 15, likely markets will do well.”

Meanwhile, an attack on revelers celebrating New Year’s in New Orleans thrust US domestic security back into the spotlight less than a month before Donald Trump is sworn in as president. The Federal Bureau of Investigation is probing that incident as well as the deadly explosion of a Tesla Cybertruck outside of Trump’s hotel in Las Vegas.



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