Mid-day: The hot start gets sold

The stock market has been on a steady decline from early levels, which saw the major indices being up between 0.9% (Dow Jones Industrial Average) and 1.9% (Nasdaq Composite). Currently, the S&P 500 is down 0.3%, the Nasdaq is down 0.6%, and the Dow is flat.

The hot start was fueled by pleasing earnings updates. Highlighting a few notable ones: Tesla ( TSLA 1037.29, +60.05, +6.2%) beat earnings estimates and reiterated lofty growth expectations, Nucor ( NUE 179.38, +10.13, +6.0%) beat earnings estimates and said it expects Q2 to be the most profitable quarter in company history, and United Airlines ( UAL 51.44, +4.91, +10.6%) said it expects Q2 to have the highest quarterly revenue in company history.

The S&P 500 reclaimed its 200-day moving average (4497), but the key technical level has proven to be a stubborn hurdle for the market. Besides the technical barrier, sentiment has been pressured by a sharp rise in interest rates and news that Chicago Fed President Evans (FOMC voter in 2023) – one of the more dovish Fed members – will retire in early 2023.

The communication services sector (-1.3%) is currently the weakest performer, as Meta Platforms ( FB 190.24, -10.12, -5.1%) and Netflix ( NFLX 218.66, -7.70, -3.4%) continue to bleed. On a related note, the streaming space can’t catch a break after Warner Bros. Discovery ( WBD 21.25, -1.75, -7.6%) confirmed it will shut down CNN+ at the end of the month.

The consumer staples (+0.6%), consumer discretionary (+0.5%), and real estate (+0.3%) sectors are up modestly.

Looking at interest rates, the 2-yr yield has jumped 13 basis points to 2.71% while the 10-yr yield has jumped ten basis points to 2.95% as it makes another push towards 3.00%.

In other earnings news, Dow Inc. ( DOW 70.23, +2.69, +4.0%), AT&T ( T 20.28, +0.85, +4.4%), and American Airlines ( AAL 20.24, +0.76, +3.9%) are trading sharply higher following their reports, while Dover ( DOV 144.16, -11.28, -7.3%) is struggling at a 52-week low despite beating top and bottom-line estimates.

Reviewing today’s economic data:

  • Initial jobless claims for the week ending April 16 decreased by 2,000 to 184,000 (Briefing.com consensus 195,000). Continuing jobless claims for the week ending April 9 decreased by 58,000 to 1.417 million, which is the lowest level since February 21, 1970.
  • The key takeaway from the report is that it covered the week in which the survey for the April employment report was conducted. The decidedly low level of initial claims should feed expectations for strong nonfarm payrolls growth in April.
  • The Philadelphia Fed Index for April decreased to 17.6 (Briefing.com consensus 21.0) from 27.4 in March.
  • The Conference Board’s Leading Economic Index (LEI) increased 0.3% m/m in March (Briefing.com consensus 0.3%) following a revised 0.6% increase (from 0.3%) in February.