Indexes slide amid earnings-fueled tech selloff

May 8, 2024

2 minutes read

A trader looks on while waiting for the initial price of Tencent Music Entertainment company's IPO on the floor of the New York Stock Exchange (NYSE) in New York, U.S., December 12, 2018. REUTERS/Bryan R Smith — A trader looks on while waiting for the initial price of Tencent Music Entertainment company’s IPO on the floor of the New York Stock Exchange (NYSE) in New YorkThomson Reuters

US stocks dropped on Wednesday led by a selloff in the tech sector.
Uber and Intel shares declined as traders fretted over earnings and weak guidance.
Tesla also fell after Reuters reported on a probe of the company’s claims about its autopilot capabilities.

US stocks slid on Wednesday, led by a sell-off in the tech sector as investors took in weak financials and earnings guidance.

Major indexes ticked lower in early-morning trading, with the Nasdaq Composite slumping 0.6%.

Uber shares were down about 5% after the rideshare service posted a $654 million loss over the first quarter. Intel dropped 2.5% after the company trimmed its guidance. Tesla shares slumped 3.5% amid reports the Justice Department is looking into the company’s claims about its autopilot feature and whether statements about the technology mislead investors.

Corporate earnings are doing well overall. The S&P 500 is expected to post at least 7% earnings growth over the first quarter, and 77% of the companies that have reported so far have beat earnings estimates, according to FactSet.

Investors, though, remain concerned over the outlook for a recession and coming rate cuts this year.

“Should rates stay this elevated for another 6-12 months, too much corporate debt and real estate debt faces a rate reset that increases the possibility of real economic impact from such tightening,” David Bahnsen, the chief investment officer of The Bahnsen Group said in a note on Wednesday.

Markets are pricing in just 1-2 rate cuts by the end of the year, according to the CME FedWatch tool, implying that the Fed funds rate will stay close to 5%. Meanwhile, the New York Fed is pricing in a 58% chance the US could slip into recession by March of next year.

Here’s where US indexes stood at the 9:30 a.m. opening bell on Wednesday:

Here’s what else happened today:

In commodities, bonds, and crypto:

West Texas Intermediate crude oil slumped 0.73% to $77.81 a barrel. Brent crude, the international benchmark, fell 0.73% to $82.55 a barrel.
Gold slipped 0.21% to $2,309.40 per ounce.
The 10-year Treasury yield rose two basis points to 4.49%.
Bitcoin dropped 2.5% to $62,088.