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Wall Street mixed following inflation fears; Tesla tumbles

2023-04-03T18:35:48Z

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S., March 30, 2023. REUTERS/Brendan McDermid

Wall Street was mixed on Monday as rising oil prices rekindled worries about interest rate hikes, while Tesla tumbled after its electric vehicle deliveries for the first quarter disappointed investors.

Tesla Inc (TSLA.O) dropped 6.8% after disclosing March-quarter deliveries rose just 4% from the previous quarter, even after CEO Elon Musk slashed car prices in January to boost demand.

While much of the market was lower, the S&P 500 energy sector index (.SPNY) jumped 4.6% and was heading for its biggest one-day gain in six months after Saudi Arabia and other OPEC+ oil producers announced unexpected output cuts that could push oil prices toward $100 a barrel. Chevron Corp (CVX.N), Exxon Mobil Corp (XOM.N) and Occidental Petroleum Corp (OXY.N) were each up more than 4%.

The prospect of higher oil costs added to inflation worries on Wall Street just days after evidence of cooling prices raised expectations that the U.S. Federal Reserve might soon end its aggressive monetary tightening campaign.

“The decision to cut production is a headwind for inflation … and that’s why, on balance we’re seeing a generally ‘risk off’ bias,” said Terry Sandven, chief equity strategist at U.S. Bank Wealth Management in Minneapolis.

Heavyweight tech-related stocks Microsoft Corp (MSFT.O), Amazon.com Inc (AMZN.O) and Nvidia Corp (NVDA.O) each fell over 1%, giving back some of their gains in a strong first quarter.

The Dow traded in positive territory, lifted in part by a 4.4% rally in UnitedHealth Group Inc (UNH.N) on better-than-proposed Medicare Advantage rates for 2024.

Investors worried about inflation drew comfort from surveys by the Institute for Supply Management and S&P Global that reflected weakness in manufacturing activity in March.

Interest rate futures imply 56% odds the Fed will raise rates by 25 basis points at its meeting in May, and 44% odds it will keep interest rates unchanged, according to CME Group’s Fedwatch tool.

The S&P 500 was up 0.01% at 4,109.91 points.

The Nasdaq declined 0.90% to 12,111.53 points, while the Dow Jones Industrial Average was up 0.82% at 33,546.57 points.

Despite turbulence in the global banking sector, the S&P 500 jumped 7% in the first quarter and the tech-heavy Nasdaq rallied 17%.

First-quarter earnings season is around the corner, with companies expected to start reporting in the next few weeks.

Across the U.S. stock market (.AD.US), declining stocks outnumbered rising ones by a 1.3-to-one ratio.

The S&P 500 posted 17 new highs and no new lows; the Nasdaq recorded 65 new highs and 101 new lows.

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