Tesla drags Nasdaq lower ahead of tech earnings

While investors awaited reports from Megacap businesses and important economic data this week, the Nasdaq led Wall Street losses on Monday as Tesla shares were pressured due to the company’s intentions to increase spending.

Tesla Inc. fell 3.4% as a result of the automaker increasing its projected capital expenditures for 2023 in order to increase output, which hurt consumer discretionary companies.

This week sees the release of results from companies that together account for more than 14% of the value of the benchmark S&P 500: Alphabet Inc., Microsoft Corp., Amazon.com Inc., and Meta Platforms Inc.

Wall Street has been supported this year by a rise in these equities, and investors are watching to see if the gains can last despite the bleak economic outlook.

The market can rise more if earnings don’t disappoint. Stronger-than-expected results from big banks have kept US stocks mostly stable through the beginning of the earnings season, allaying concerns about a spillover from the banking crisis in March.

According to Refinitiv IBES statistics, of the 90 S&P 500 businesses that have so far announced first-quarter results, roughly 77% have exceeded analysts’ earnings projections. The average beat rate over the long period is 66%.

The predictions for earnings have also slightly improved, with experts now anticipating a 4.7% quarterly profit contraction rather than the 5.1% decline predicted at the beginning of April.

This week’s data releases include preliminary estimates of the first-quarter US GDP, the personal consumption expenditures index (PCE) for March, and consumer confidence figures for April.

Money market traders have set a 92% chance that the Fed will raise interest rates by 25 basis points in May, despite last week’s mixed economic data.

Before entering the blackout period until the next policy meeting, the majority of Fed policymakers during the past week acknowledged the central bank needs to do more effort on bringing down inflation.

Following recent indications of slowing inflation and economic growth, US Treasury yields decreased, but investors seemed more concerned about a potential impasse over the US debt ceiling.

In response to ongoing worries that the US government may sooner than anticipated reach its debt ceiling, US House of Representatives Speaker Kevin McCarthy indicated the House would vote on his spending and debt bill this week.