Markets await Fed minutes after bad start on Wall Street

Wall Street tumbled on its opening day of trading led by Apple, which fell 3% and Tesla which shed another 12% on Tuesday. Early hopes of a positive first day of 203 after strong sessions in Europe and Asia quickly faded, giving way to the same recessionary fears ahead of the release of Fed minutes on Wednesday.

Coming Up

● Wall Street dropped on first day of 2023
● Tesla stock drops 12%, Apple falls 3%
● US dollar rises before Fed minutes

Noteworthy

- Eurozone S&P Global Composite PMI released at 9am GMT
- ISM Manufacturing data is released 3.00pm GMT
- Fed minutes released 7pm GMT

Wall Street dropped on first day of 2023

Futures are pointing to a lower start on Wednesday as investors remain nervous about the path for US interest rates and the implications that has for stock market valuations. Weakness in energy stocks, a top performer in 2022 added to the weakness.

Oil prices turned lower, likely also a reflection of expectations for slower economic growth this year, and the good chance of a recession. After hitting new 2022 lows in mid-December at around $76 per barrel, Brent crude had gained back $10 through the end of the year. However the price put in a bearish engulfing candlestick on Tuesday’s daily chart and is following through on Wednesday, taking the price close to a break below $80.

Tesla stock drops 12%, Apple falls 3%

Shares of Tesla closed down 12% Tuesday after the firm reported fourth-quarter vehicle production and delivery numbers for 2022. It was a 40% jump in annual deliveries to 1.31 million, a new record high for Elon Musk’s EV company but the numbers missed Wall Street expectations. Sentiment continues to sour on the stock, which shed ~70% of its value in 2022. The miss in deliveries might spell problems ahead this year where demand for Tesla could cool thanks to a slowing global economy and greater EV competition.

In previous years the disclosure of such delivery numbers might have prompted a rally in the stock but investors took the opportunity to sell the shares. The shares remain highly valued in a stock market that is putting a lot of emphasis on valuations as interest rates keep rising. It’s arguable the inflation data might play a bigger role than Tesla deliveries data for the TSLA share price this year.

US dollar rises before Fed minutes

The euro tumbled 1% on Tuesday after a bigger than expected fall in German inflation data, though has since retaken half the losses as investors fret about FOMC minutes released on Wednesday.