US stock indexes have fallen, dragged by losses in Tesla and Uber, while a rebound in bond yields further pressured megacap stocks as investors seek clarity on the Federal Reserve’s rate path.
Uber lost 5.4 per cent after the ride-hailing platform forecast second-quarter gross bookings below expectations and posted a surprise first-quarter loss.
Tesla fell 3.1 per cent after Reuters reported that US prosecutors were examining whether the company committed securities or wire fraud by misleading investors and consumers about its electric vehicles’ self-driving capabilities.
Among other megacap stocks, Microsoft, Nvidia and Alphabet fell between 0.3 per cent and 1.1 per cent following a rise in the 10-year Treasury yield after five days of declines.
The day’s losses come after the S&P 500 closed higher for a fourth straight session on Tuesday, its best winning run since March, while the blue-chip Dow scored a fifth session of gain in its longest positive run since December 2023.
Markets have mostly traded higher so far in May, as investors took comfort from an upbeat earnings season as well as a recent softer than expected labour market report, which tempered concerns about the Fed keeping interest rates higher for longer.
Traders are pricing in a 65 per cent chance of the US central bank cutting interest rates by at least 25 basis points in September, according to the CME Group’s Fedwatch tool, up from about 54 per cent a week ago.
“The market has now priced in the Fed’s move for the rest of the year, so the reaction function will be lower moving forward and investors will start to focus more on the economic and earnings backdrop,” said Dylan Kremer, chief investment officer at Certuity.
“The bond yields aren’t necessarily reflecting the expected Fed activity..and that’s primarily due to still resilient growth.”
Investors will closely monitor comments from Fed speakers – vice chair Philip Jefferson, Boston president Susan Collins and governor Lisa Cook during the day – for fresh clues on the US central bank’s monetary easing plans.
With the earnings season at its tail-end and only a few economic reports expected this week, markets are awaiting next week’s consumer prices reading to gauge if inflation is cooling.
Rate-sensitive real estate led sectoral declines, down 0.8 per cent.
In early trading on Wednesday, the Dow Jones Industrial Average fell 7.11 points, or 0.02 per cent, to 38,877.15, the S&P 500 lost 16.17 points, or 0.31 per cent, to 5,171.53 and the Nasdaq Composite lost 88.08 points, or 0.54 per cent, to 16,244.48.
Intel lost 2.2 per cent after the chipmaker said the US Department of Commerce was revoking certain export licences for its consumer-related items to a customer in China, a move that would impact its second-quarter revenue.
Uber rival Lyft climbed 7.8 per cent after projecting higher-than-expected gross bookings and a core profit for the current quarter.
Declining issues outnumbered advancers by a 3.08-to-1 ratio on the NYSE and a 2.57-to-1 ratio on Nasdaq.
The S&P 500 posted 12 new 52-week highs and 2 new lows while the Nasdaq recorded 22 new highs and 38 new lows.