(Bloomberg) — A stock rally driven by dip buyers waned as Tesla Inc. weighed heavily on the market, with traders also assessing the latest economic readings against prospects for rate hikes.
The technology-heavy Nasdaq 100 was little changed, while the S&P 500 traded well below session highs amid strong trading volume. Elon Musk’s electric-car company tumbled more than 8% amid cautious comments on supply-chain troubles. Apple Inc. remained higher ahead of its earnings report. The dollar gained for a fourth straight day, while the two-year Treasury yield — which is more sensitive to near-term policy moves — climbed.
More than $5 trillion has been wiped out from stock values this year as traders struggled to price the outlook for monetary policy. Markets had been factoring in four quarter-point hikes in 2022, but that edged toward five after Federal Reserve Chair Jerome Powell suggested the economy and labor market could handle a faster pace if warranted. U.S. gross domestic product accelerated by more than forecast in the fourth quarter, while jobless claims fell for the first time in four weeks.
Morgan Stanley’s strategist Andrew Sheets is doubling down on a bet that U.S. stocks are turning from leaders to laggards as they struggle to adjust to an era of tighter policy. He ramped up his projection that inflation-adjusted yields will rise from deeply negative levels back to the pre-pandemic norm — threatening fresh pain for rate-sensitive growth shares that drive America’s megacap indexes.
Other corporate highlights:
- Netflix Inc. soared as hedge fund magnate Bill Ackman acquired more than 3.1 million shares in a vote of confidence following a recent collapse in the streaming giant’s stock price.
- Comcast Corp. plans to double spending on content for its Peacock streaming service this year in an attempt to attract more paying subscribers. Shares rose.
- Chipmaker Intel Corp. sank on a disappointing profit forecast.
- T. Rowe Price Group Inc. tumbled after the firm said client redemptions may continue with the Fed poised to raise rates.
What to watch this week:
- Euro zone economic confidence, consumer confidence Friday.
- U.S. consumer income, University of Michigan consumer sentiment Friday.
For more market analysis, read our MLIV blog.
Some of the main moves in markets:
Stocks
- The S&P 500 rose 0.3% as of 12:28 p.m. New York time
- The Nasdaq 100 was little changed
- The Dow Jones Industrial Average rose 0.6%
- The MSCI World index fell 0.3%
Currencies
- The Bloomberg Dollar Spot Index rose 0.6%
- The euro fell 0.8% to $1.1148
- The British pound fell 0.6% to $1.3380
- The Japanese yen fell 0.6% to 115.35 per dollar
Bonds
- The yield on 10-year Treasuries declined eight basis points to 1.79%
- Germany’s 10-year yield advanced two basis points to -0.06%
- Britain’s 10-year yield advanced three basis points to 1.23%
Commodities
- West Texas Intermediate crude fell 0.5% to $86.87 a barrel
- Gold futures fell 2.1% to $1,794 an ounce
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