Wall Street experienced a partial recovery on Wednesday, as some losses were regained. Industrial stocks faced a downturn, but Tesla’s post-earnings surge and a barrage of earnings reports from prominent companies helped counterbalance the market. The tech-heavy Nasdaq Composite initially jumped nearly 1% at the start of regular trading due to Tesla’s significant gains. The electric vehicle giant’s stock exhibited its strongest reaction to a quarterly report since before the COVID-19 pandemic. CEO Elon Musk highlighted new mass-market models and suggested that Tesla should be valued as an artificial intelligence robotics company. The Nasdaq briefly dipped into negative territory but recovered to positive ground, ending the afternoon trade with a 0.28% gain to 15,740.93 points. The S&P 500 benchmark index gained 0.10% to 5,075.55 points, while the Dow Jones Industrial Average climbed 0.04% to 38,518.70 points. Among the 11 S&P sectors, six advanced. Industrials led the decliners, slipping approximately 1.5%. Trucking and transportation stocks exerted a significant drag on the sector, continuing a recent pullback following disappointing quarterly reports from companies like CSX, J.B. Hunt Transport Services, and Old Dominion Freight Line. Defense contractor General Dynamics also contributed to the sector’s decline after missing profit expectations. Hasbro emerged as the top percentage gainer on the S&P 500. The toymaker trimmed its quarter-end inventory and improved profitability. Boeing initially gained but later erased those gains due to news that its efforts to reacquire parts supplier Spirit AeroSystems were encountering difficulties. Biogen, a drugmaker, climbed after reporting improved uptake of its Alzheimer’s therapy, Leqembi. Favorable earnings reports from other heavyweights on Monday and Tuesday contributed to Wall Street’s consecutive sessions of gains and recovery from its worst week in over a year.
Treasury yields moved higher as investors sold bonds, which in turn exerted pressure on equities. This movement resulted from a combination of factors, including position squeeze concerns following strong Treasury auctions and renewed conflict in the Middle East between Israel and Hezbollah. The longer-term 30-year and 10-year yields increased by 6 basis points each, reaching 4.79% and 4.66%, respectively. The shorter-term, more rate-sensitive 2-year yield rose by 1 basis point to 4.95%.
Marko Kolanovic of JPMorgan commented on the market’s current state, expressing concerns about complacency in equity valuations, persistently high inflation, further Fed repricing, and an overly optimistic profit outlook. Kolanovic noted similarities to last summer when inflation surprises and hawkish Fed revisions led to a correction in risk assets, with investor positioning now appearing even more elevated.
The economic calendar for Wednesday was relatively light. The most notable release was durable goods orders, which exceeded expectations in March. However, Wells Fargo has indicated that weak shipments in the data may pose a downside risk for U.S. Q1 GDP growth, the initial estimate of which is anticipated for release on Thursday.
