By Yasin Ebrahim
Investing.com -- The Dow pared some losses Thursday, but ended lower as Tesla led a slew of mostly disappointing quarter results just as economic data stoked further worries about a deeper slowdown.
The concerns over margins intensified after the chief executive Elon Musk touted more cost cuts to boost sales, forcing some cautious commentary from Tesla bull Wedbush.
“[W]e remain very bullish on the Tesla story, however, this margin compression and price cut narrative must be carefully managed over the coming quarters as it now emerges as a clear overhang on the stock,” Wedbush said in a note after cutting its price target on the stock to $200 from $225.
Tesla’s willingness to sacrifice margins for long-term demand gain stoked fears of price war in the industry, pushing other automakers including General Motors Company (NYSE: GM ) and Ford Motor Company (NYSE: F ) about 3% lower.
Semiconductor stocks traded roughly unchanged as investors weighed up a surge in Lam Research Corp (NASDAQ: LRCX ) on better-than-expected Q3 results and a slump in Seagate Technology PLC (NASDAQ: STX ) following a quarterly report that missed on both the top and bottom lines.
AT&T Inc (NYSE: T ), a major dow component, slumped more 10% amid concerns about the company’s ability to meet its guidance and mixed quarterly results showing a revenue missed estimates.
“While we had anticipated lower FCF (free cash flow) to start the year, investors may question whether AT&T can achieve its full-year FCF guidance of $16bn+ as this will likely require significant improvements in working capital impacts for the remainder of 2023,” Goldman Sachs said in a note.
But there were some positives on the earnings front as DR Horton Inc (NYSE: DHI ) and Las Vegas Sands Corp (NYSE: LVS ) reported quarterly results that beat on both the top and bottom lines, with the shares trading up more than 6% and 3.6% respectively.
Sentiment on risk assets including stocks was also soured by data showing further weakness in manufacturing and an uptick in jobless claims .
The Philadelphia Fed said Thursday its manufacturing index fell to a reading of -31.3 in April, from -23.2 in March.
The weaker data stoked worries about a deeper slowdown in the economy at a time when the Federal Reserve continues to lean toward further rate hikes.
“The bigger risk now is that the Fed squeezes so hard that wage growth slows too far next year,” Pantheon Macroeconomics said in a note.
Echoing some of her Fed peers, Cleveland Federal Reserve President Loretta Mester said she expected that interest rates would “need to move somewhat further into restrictive territory this year,” and remain higher to curb inflation.
Add Chart to Comment
We encourage you to use comments to engage with users, share your perspective and ask questions of authors and each other. However, in order to maintain the high level of discourse we’ve all come to value and expect, please keep the following criteria in mind:
- Enrich the conversation
- Stay focused and on track. Only post material that’s relevant to the topic being discussed.
- Be respectful. Even negative opinions can be framed positively and diplomatically.
- Use standard writing style. Include punctuation and upper and lower cases.
- NOTE: Spam and/or promotional messages and links within a comment will be removed
- Avoid profanity, slander or personal attacks directed at an author or another user.
- Don’t Monopolize the Conversation. We appreciate passion and conviction, but we also believe strongly in giving everyone a chance to air their thoughts. Therefore, in addition to civil interaction, we expect commenters to offer their opinions succinctly and thoughtfully, but not so repeatedly that others are annoyed or offended. If we receive complaints about individuals who take over a thread or forum, we reserve the right to ban them from the site, without recourse.
- Only English comments will be allowed.
Perpetrators of spam or abuse will be deleted from the site and prohibited from future registration at Investing.com’s discretion.