Stocks dropped on Thursday morning as Wall Street appraised a mixed bag of corporate earnings, and disappointing results from Tesla weighed on technology stocks.
The Dow Jones Industrial Average lost 82 points, or about 0.2%. The S&P 500 and Nasdaq Composite both dropped 0.4%.
Mounting concern over downward pressure on profit margins hurt Tesla shares as the electric vehicle maker posted a more than 20% decline in both net income and GAAP earnings from a year ago. During the period, the company cut prices on some of its cars. Shares fell more than 7%.
The decline dragged down the technology sector, with names like Netflix, Nvidia and Microsoft all modestly lower. Falling Seagate Technology shares also added to the declines. The computer storage stock lost 4% after missing estimates and sharing disappointing guidance, citing weak demand. Energy stocks also showed signs of weakness as oil fell.
Disappointing results from both AT&T and American Express did little to alleviate some of the market concern. The payments company, offering another look at the health of the U.S. consumer, lost 5% as earnings per share that fell short of estimates.
So far this earnings season, about 16% of companies in the S&P 500 have reported results, with about 62% beating expectations, according to FactSet. Many on Wall Street this season are bracing for an earnings decline. A general lack of profit forecasts, however, has begun to concern some investors.
Elsewhere, a new round of economic data seemed to signal a contracting economy and the potential for a much bigger slowdown than anticipated. The Philadelphia Fed manufacturing index fell more than expected, to its lowest level since May 2020, while jobless claims rose over the previous week.
“If the Fed stays the course, broad financial conditions should continue to tighten, the economy should
decelerate into recession, and stocks should trade down sharply,” said Wolfe Research’s Chris Senyek in a Thursday note.
Comments on the economy from central bank speakers are also slated for Thursday. Federal Reserve Governor Christopher Waller, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta are all on deck.
To be sure, despite Thursday’s moves, some investors see positives ahead for the market.
Adam Sarhan, CEO of 50 Park Investments, notes that the market continues to trade in tight range, with the major indices holding above their moving averages. That could be a positive indicator of where the market is headed, he said.
“The fact that we’re seeing the major indices across the board hold up well when they have every chance in the world to fall, that in it of itself is a bullish mode,” he said. “The market is just in a wait and see mode” as it awaits more earnings results.
Stocks are coming off a mixed session on Wednesday. The S&P 500 finished slightly below its flatline, while the Nasdaq Composite ended slightly higher. The Dow closed 0.2% lower.