Latest stock trends: US stocks rise, Tesla price drops
In the latest stock trends, US stock indices were expected to open higher on Monday following sharp declines in the prior session, after easing tensions in the Middle East buoyed risk appetite.
The relief rally comes at a crucial point in the market’s earnings calendar, with a slew of major tech earnings this week and a critical inflation report due on Thursday.
Commodity news: Oil price falls nearly 3%
Latest stock trends: Netflix weighing down indices
The Nasdaq and the S&P 500 both ended down Friday, with Netflix’s poor results weighing heavily on the indices.
That represented six straight days of losses, the longest streak of declines since October.
Stock prices for several big growth stocks in premarket trading this morning are up a bit. Meta Platforms shares are up 0.5%, Amazon is up 0.8%, Apple is up 1.0%, and Nvidia is up 0.7% in premarket trading (though it remains down 10% from where it was last session).
Latest stock trends: Earnings reports out in May
With earnings reports due out next week from the makers of other popular technologies, the market focus remains centred on the mega caps that are currently leading the latest stock craze: Tesla is reporting next week, along with the makers of Facebook, Google and Microsoft, Meta Platforms and Alphabet.
The general good mood of the market was also driven by international diplomatic developments, as Iran’s foreign minister said he was not willing ‘to rush into pointing fingers’ over a recent attack on its oil tankers – a statement that helped ease geopolitical concerns that had been weighing down on spirits.
In addition to the shifting winds in the equity market, there has also been an adjustment in market expectations for cuts to US Federal Reserve interest rates.
Some strong economic data recently suggests that inflationary pressures are going to be sustained, and money markets are now pricing in a total of just over 38 basis points of cuts for the year – down from somewhat loftier expectations.
This week’s release of the March Price Consumption Expenditure (PCE) index, the Fed’s preferred measure of inflation, will also be carefully scrutinised in anticipation of its bearing on future Fed policy and, implicitly, the latest direction of equity markets. After a media blackout over the weekend of Fed policymakers ahead of the Fed’s policy meeting on 1 May.
Dow e-minis were up 192 points in early trade (the same factors as mentioned above). And S&P 500 e-minis were also up, as were Nasdaq 100 e-minis, suggesting a broad market and economic-based jump at the start of the trading day.
Of course, individual stocks such as ones in Tesla, were down 4.1% in the pre-market after the electric carmaker announced price cuts in several major markets.
Salesforce was up 3.3%, with the software company terminating its acquisition talks with Informatica.
Sectors, stocks, companies, all have their own unique movements but ultimately impact the overall stock market at any given moment.
World shares rebounded on Monday as global equities erased some losses as investors began to take some of the defensive bets that they took on over worries of a widening Middle East crisis.
After the weekend’s rocky trading around the fall of crude oil prices below zero, investors are now bracing for a week packed with corporate earnings, as 158 companies in the S&P 500 and 173 in the STOXX 600 are slated to report. This news could be a make-or-break point for the latest trend in stocks.
Leading the charge this week are some big European banks as well as US titans such as Microsoft and Alphabet, with the latter taking centre stage after Nvidia, the chipmaker, tanked 10% last Friday, its biggest one-day sell-off in four years.
Crucial US PCE inflation data, which the Federal Reserve watches for deciding future rate decisions, is also due this week, and could help keep the latest downtrend in equities moving.
Latest stock trends: safe haven markets
Like the rising sun, markets are sensitive to the light of corporate performance, and the newly brightened landscape offers plenty of rays that should continue to warm share prices for the time being.
These included a further reversal from the risk-off mood of the previous Friday in commodity markets. Gold, often regarded as a safe haven, fell 2% to $2,341.9 an ounce, its largest daily percentage drop in more than a year, though it remains close to its record high.
Oil too came back down to earth as the spotlight returned to fundamental supply and demand dynamics. Brent futures dropped 73 cents to $85.56 a barrel.
Broader financial markets also shifted, with bond yields rising and the dollar index climbing 0.19% to 106.28, just shy of last week’s five-month high, as investors continue the process of recalibrating risk to adapt to geopolitical developments and upcoming economic data.
Over the course of the week, these earnings announcements and economic reports will probably drive the direction of the latest stock movements: they are important for traders trying to gauge the direction of the momentum of markets, which are sensitive to changing geopolitical and economic factors.
Latest stock trends: Tesla stock drops
Tesla’s stock tumbled more than 3% in premarket trading on Monday, reflecting Wall Street’s pain over plunging margins after the company’s latest global price cuts.
The EV giant slashed prices last week by up to $2,000 on its popular products – including the Model 3 and Model Y – in a bid to accelerate its sales in key markets, including the US, China and Germany, while high interest rates dampen demand.
Tesla’s price cuts are happening on the eve of the company’s latest quarterly earnings, on Tuesday when it is expected to report its first revenue decline and a gross margin that’s the lowest since 2019, according to data from LSEG.
This is perhaps the most important easing of Tesla’s plans as investors await further clues on what the CEO Elon Musk will prioritise, especially after recent layoffs totalling 10% of Tesla’s staff, and Musk’s renewed focus on self-driving technology.
Earnings are ‘a moment of truth’ and could be ‘one of the most important moments in Tesla’s history’, according to the Wedbush Securities analyst Dan Ives.
Such moves are behind the latest stock movements, after the company’s shares dipped to $141.80 in pre-market trading, a loss of almost 41% so far this year.
Perceptions that Musk’s political bent and outbursts have alienated some would-be buyers add to the volatility in the Tesla stock.
After Monday’s trading session, Tesla’s $468 billion market valuation is poised to lose somewhere around $15 billion. Tesla remains the world’s largest automaker, but Toyota is seen as a nipping at its heels.
Toyota’s hybrid models have been the hottest-selling vehicles, particularly in the US, and its market capitalisation has been rising. At the last close, it was at $306 billion.
In the week up to April 19, global hedge fund borrowing rose to a five-year high, according to a note from Goldman Sachs. Behind the surge is a concerted effort by hedge funds to pounce on the first meaningful selloff in US and European stock markets this year. Banks often provide leverage to hedge funds.
In this way, investors can turbocharge their returns on investment by taking out loans, which also increase the size of their investment positions.
The downside is that losses can be magnified too.
Latest stock trends: Goldman Sachs
Goldman Sachs said that gross leverage, or the total amount borrowed, rose 2.6 points to 270%, while net leverage, or the ratio of a fund’s total assets including borrowed funds to its actual holdings, rose 0.5 points to 73% in the most recent week.
The leveraging behaviour of investment managers – those wasting their money on stock-picking – was particularly evident, with leveraged stock-picking hedge funds raising leverage at a rapid rate.
The leveraging behaviour of systematic hedge funds, who rely on ‘black box’ trading algorithms, was not explicitly described in the note.
This was also a time when hedge funds stopped selling stocks as recently as last month to purchase dips in global equities, particularly in the US and Europe.
For example, after hitting an all-time high of 3218 on 28 March, the SPY plunged almost 6%, representing its biggest correction since October. The Stoxx Europe 600 index also recorded its biggest weekly drop since mid-January, losing 1.2%.
Historically, such market movements are not uncommon, with the average year since 1929 seeing nearly three 5% pullbacks, according to an analysis by Bank of America.
The latest hedge fund trading strategies showed their heaviest level of net buying of tech stocks in two months, but they continued to have a short position on consumer discretionary sectors including luxury goods and travel. In addition to tech, they expanded purchases of stocks in several other sectors, including healthcare, real estate and industrials.
Single stock trading, which saw the biggest notional long buying in more than a year, also saw solid trading volumes. Meanwhile, macro products continued to see net selling for a third straight week, mostly through short selling.
Buying was concentrated in North America and Europe, while Asian markets saw net selling. It was this type of structural reallocation as the market environment changed that was a driving force behind the week.
Indian shares ended higher on Monday, as global markets recovered from a selloff over the weekend when mounting tension in the Middle East sparked a flight to safety that pushed benchmarks on both sides of the Atlantic to their worst daily performances in a month at the end of last week.
The broader NSE Nifty 50 index was up 0.86% at 22,336.40 and the S&P BSE Sensex was up 0.77% at 73,648.62. Both had dropped 1.6% last week, as investors fretted about tensions in the Middle East and delays in US interest rate cuts.
These geopolitical risks were also the reason behind the decline of shares in Asia, which dropped 3.7% last week, before rising 0.9%on Monday.
Gold prices also dropped as mood over the weekend improved for the better. ‘Helping the latest stock trend is the easing of tensions following Iran’s step on 31 January to ease tensions,’ said analysts at OCBC.
Wipro was the best performer in the select group of stocks, adding 2%t after the IT services company’s quarterly revenue was ahead of expectations.
The three state-run oil marketing companies, Bharat Petroleum Corp, Hindustan Petroleum Corp and Indian Oil Corp, rose between 2.5% and 3.5%, riding on the easing global fuel prices.
Among the 50 stocks, the strongest entity and the one with the highest weight on the index, HDFC Bank, lost 1.25% after its quarterly profit failed to meet expectations because of higher provisions.
Meanwhile, the fund manager Mohit Khanna at Purnartha Investment Advisors suggested that after the latest round of mark-to-markets amid weak global cues, a keen eye on corporate earnings and management commentaries would be pivotal in determining the latest movement of Indian stocks.
Just before the market closed for the day, Reliance, another key heavyweight on the Nifty 50, closed with a gain of 0.78% – its financial report due soon after market hours.
Besides, a recovery in small- and mid-cap stocks, which rose by 1.31% and 0.82% respectively, which are more domestically oriented, has also been in focus.
