Day Traders Diary

4/20/23

The major averages sold off on Thursday, as Wall Street reacted to a mixed bag of corporate earnings, including disappointing results from Tesla. The Dow Jones Industrial Average lost 109 points, or 0.3%. The S&P 500 fell 24 points or 0.59% while the Nasdaq Composite declined 97 points or 0.8%.

The mounting concern over downward pressure on profit margins hurt Tesla shares as the electric vehicle maker cut prices on some of its cars during the recent quarterly period. The company posted a more than 20% decline in net income from a year ago after the bell Wednesday. Shares fell more than 10%.

Tesla weighed on the tech-heavy index and the broader sector, with Nvidia, Microsoft and Apple all trading lower. Seagate Technology shares lost more than 9% after missing estimates and issuing disappointing guidance, citing weak demand. Energy marked another area of market weakness as oil prices declined about 2%. Some laggards included APA, Marathon Oil and ConocoPhillips.

Disappointing results from both AT&T and American Express did little to alleviate some of the market concern. The payments company, offering another look at the health of the U.S. consumer, lost about 2% as earnings per share fell short of estimates. AT&T fell 10% on slowing subscriber growth fears.

So far this earnings season, about 16% of companies in the S&P 500 have reported results, with about 76% beating EPS expectations, according to FactSet data as of Thursday. Many on Wall Street this season are bracing for an earnings decline. A general lack of profit forecasts, however, has begun to concern some investors.

The real test may come next week as earnings season ramps up with a slate of results from big technology companies, said Art Hogan, chief market strategist at B. Riley Financial.

He added that despite the incoming economic data, slowdown fears and a banking crisis that rattled the broader financial sector last month, markets have traded sideways in recent weeks.

Elsewhere, a raft of fresh of economic data seemed to signal a contracting economy and the potential for a much bigger slowdown than anticipated. The Philadelphia Fed manufacturing index fell more than expected, to its lowest level since May 2020, while jobless claims rose over the previous week.