Mid-day: Lingering growth concerns slowing down the market

The S&P 500 is down 0.4% as growth concerns prompt some profit-taking interest in the market. The Dow Jones Industrial Average (-0.7%) and Russell 2000 (-1.2%) are underperforming while the Nasdaq Composite, which was up 0.9% intraday, is now down 0.2%.

Growth concerns have been attributed to the following events: Shanghai announcing a two-phase Covid lockdown, Nikkei reporting that Apple ( AAPL 173.54, -1.15, -0.7%) plans to cut production of the iPhone SE and AirPods, the White House proposing tax increases in the FY23 budget, and the prolonged Russia-Ukraine situation.

Accordingly, the S&P 500 cyclical sectors are underperforming with losses ranging from 0.8% (industrials) to 2.5% (energy), WTI crude is down 5.6% to $107.50/bbl, and the 10-yr Treasury note yield is down three basis points to 2.46% in a curve-flattening trade. The 2-yr yield is up four basis points to 2.33%.

Considering the growth concerns and the fact that the S&P 500 was up 8.9% since March 14, today’s 0.3% decline for the benchmark index is being viewed constructively. The market could be consolidating its rebound rally ahead of a big round of economic data this week, including the March employment report on Friday.

Tesla ( TSLA 1079.00, +69.10, +6.8%), meanwhile, is racing ahead with a 7% gain after announcing it will ask shareholders to vote at this year’s annual meeting to authorize additional shares to enable another stock split.

The consumer discretionary sector, which is home to Tesla, is up 1.3%. The real estate sector (+0.9%) follows closely behind.

Separately, shares of Poly ( POLY 39.33, +13.13, +50.1%) have jumped 50% after HP Inc. ( HPQ 38.91, -0.94, -2.4%) agreed to acquire the company for $40 per share in cash. Including debt, the deal is worth $3.3 billion.

Reviewing today’s economic data:

  • The Advance report for International Trade in Goods for February showed a deficit of $106.6 billion, versus an unrevised $107.6 billion in January. The Advance report for Retail Inventories for February rose 1.1%, while the Advance report for Wholesale Inventories for February rose 2.1%.