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Stocks Selloff Returns as Traders Lose Their Nerve: Markets Wrap
(Bloomberg) — An early rally in equities collapsed and major US benchmarks looked poised to extend a selloff that shaved more than a trillion dollars from share prices over the last four sessions. Tesla Inc.’s post-Christmas slump swelled to nearly 20% after its annual vehicle sales dropped.
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Treasury yields steadied. The rate on the benchmark 10-year was nearly 20 basis points above the level prior to Jerome Powell’s hawkish turn at a Dec. 18 Federal Reserve meeting. Big moves have proliferated across asset classes after Powell’s board expressed waning enthusiasm for interest-rate cuts. The Cboe Volatility Index climbed for the fourth time in five days.
Tesla sagged after the electronic vehicle-marker’s fourth-quarter deliveries missed estimates and annual sales dropped for the first time in over a decade. The stock was on track for its worst five-day drop in more than two years.
This year will be a “show-me year” for corporate earnings, according to Lisa Shalett at Morgan Stanley Wealth Management. As for the grim end to 2024, it’s “too soon to call it a bad omen,” she told Bloomberg Television.
Treasuries erased an early advance after a reading of weekly jobless claims fell to an eight-month low. A Bloomberg gauge of the dollar’s strength traded at a more than two-year peak.
Goldman Sachs economists led by Jan Hatzius noted that “seasonal adjustment challenges can make jobless claims readings particularly volatile around the holiday season.”
US stocks had been straining to snap a losing streak that took some shine off the S&P 500’s best two-year run dating back to the late 1990s. The index has surged more than 50% since the start of 2023, driven by gains in the tech megacaps amid enthusiasm about the boost to profits from artificial intelligence.
Meanwhile, an attack on revelers celebrating New Year’s in New Orleans thrust US domestic security back into the spotlight less than a month before Donald Trump is sworn in as president. The Federal Bureau of Investigation is probing that incident as well as the deadly explosion of a Tesla Cybertruck outside of Trump’s hotel in Las Vegas.
A shooting overnight at a nightclub in New York City only added to the anxiety, while authorities said it wasn’t related to terrorism.
Stocks Selloff Returns as Traders Lose Their Nerve: Markets Wrap
The stock market saw a sharp selloff today as traders lost their nerve amid growing concerns about inflation, rising interest rates, and geopolitical tensions. Major indices tumbled, with the S&P 500, Dow Jones Industrial Average, and Nasdaq all posting significant losses.
Investors were spooked by a combination of factors, including the Federal Reserve’s plans to raise interest rates sooner than expected, surging inflation data, and escalating tensions between Russia and Ukraine. These uncertainties led to a broad-based selloff across sectors, with technology, financials, and energy stocks leading the decline.
The VIX, a measure of market volatility, spiked higher as investors rushed to hedge their positions and protect against further downside risk. Safe-haven assets such as gold and Treasury bonds saw a surge in demand, while riskier assets like cryptocurrencies and meme stocks took a hit.
As the market sell-off intensified, some analysts warned that the recent bout of volatility could be a sign of more turbulence ahead. The lack of a clear catalyst for the selloff added to investors’ anxiety, with many questioning whether this is the start of a larger correction in the market.
Despite today’s sharp decline, some investors remained optimistic about the long-term outlook for stocks, citing strong corporate earnings, robust economic growth, and supportive fiscal and monetary policy. However, the current environment of heightened uncertainty and volatility is likely to keep investors on edge in the days ahead.
In conclusion, the stock market selloff today serves as a stark reminder of the fragility of investor sentiment and the potential for sudden shifts in market dynamics. As traders navigate these uncertain times, it will be crucial to stay informed, remain disciplined, and be prepared for further volatility in the days and weeks to come.
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