Jan 3 (Reuters) – Wall Street’s main indexes closed lower on the first trading day of 2023 with big drags from Tesla and Apple, while investors worried about the Federal Reserve’s interest-rate hiking path as they awaited minutes from its December meeting.
Shares in electric vehicle maker Tesla Inc (TSLA.O) hit their lowest level since August 2020 and put pressure on the consumer discretionary sector (.SPLRCD) after missing Wall Street estimates for quarterly deliveries.
Apple Inc (AAPL.O) shares sank, with the iPhone maker hitting its lowest level since June 2021, after a report from Nikkei Asia pointed to weaker demand. In addition, an analyst downgraded their rating of the stock due to production cuts in COVID-19-hit China.
The energy sector (.SPNY), which logged stellar gains in 2022, started the year in the red as oil prices fell on bleak business activity data from China and concerns about the outlook for the global economy. .
The main U.S. stock indexes had ended 2022 with their steepest annual losses since 2008 following the Fed’s fastest pace of rate hikes since the 1980s to stamp out decades-high inflation.
“Even though the calendar has changed, a lot of the main issues for the market have not, specifically with the Federal Reserve tightening monetary policy as it’s still concerned about inflation,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance in Charlotte, North Carolina.
“We’re in a bear market. Negative is the default reaction to everything,” he said. “Until the Fed really changes their tone, it’s an uphill battle for the market.”
Michael James, managing director of equity trading at Wedbush Securities in Los Angeles, also cited worries about Apple’s demand stemming as well as Tesla’s sharp decline for the broader market’s weakness on Tuesday.
According to preliminary data, the S&P 500 (.SPX) lost 15.43 points, or 0.40%, to end at 3,824.07 points, while the Nasdaq Composite (.IXIC) lost 78.21 points, or 0.75%, to 10,388.28. The Dow Jones Industrial Average (.DJI) fell 12.33 points, or 0.04%, to 33,134.92.
The S&P 500 had shed 19.4% in 2022, marking a roughly $8 trillion decline in market capitalization, while the Nasdaq fell 33.1%, dragged down by growth stocks.
Investors on Wednesday will closely monitor the minutes of the Fed’s December policy meeting, when the central bank raised interest rates by 50 basis points after four straight 75 basis points hikes and signaled rates could stay higher for longer.
Other economic data due this week includes the ISM manufacturing report, also on Wednesday, and December’s jobs report on Friday.
Weakness in the labor market could give the Fed a reason to ease its monetary policy tightening, but the data so far has shown that market remains tight despite rate hikes.
Money market participants see a 68% chance the Fed will raise the benchmark rate by 25 basis points to 4.50% to 4.75% in February, with the rates peaking at 4.98% by June. .
Reporting by Sinéad Carew in New York; Shubham Batra, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and Jonathan Oatis
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