red wins, Tesla tries a rebound

(Boursier.com) — Wall Street finally points in red at the start of the session. In very limited news, economic fears are still very much present and bond yields are resuming their rise. This punishes the stock markets, Nasdaq in the lead. that S&P500 fell 0.33% to 3,817 points, while Dow Jones fell 0.22% to 33,162 points. that Nasdaq lost 0.47% to 10,304 points. The yield on 10-year US Treasuries rose 3 basis points to 3.871% at a five-week high.

Three days before the end of the trading year, there are few operators in the trading rooms, which affects the trading volume. The S&P 500 is currently down nearly 20% since the start of 2022 and is on the verge of posting its biggest decline since 2008. The results are even more negative for the Nasdaq Composite, which is down 34% since January 1, weighed down by the interest rate hike .

While the reopening of China’s borders as part of a further easing of health restrictions and the lifting of most of the remaining Covid-19 restrictions in Hong Kong is good news, it also raises concerns about the inflationary pressures that could encourage the federal government. Reserves to maintain a very hawkish monetary policy despite fears of recession. “We could get a pivot later next year from the Fed where they actually start lowering interest rates, but that will happen when the situation gets much worse than it is now,” Matt Maley, strategist at Miller Tabak, told Bloomberg TV. +Co. “If we just have this slow decline, the Fed will keep interest rates high even if they stop raising them in any way”.

On the macro front, today’s two American ‘states’ contrasted. The situation has not improved in the real estate market, as the index of home sales promises for the month of November, as measured by the National Association of Realtors, shows a significant decrease of 4% compared to the previous month. , falling to its lowest since April 2020. Consensus was for a decline limited to 1% after a 4.6% drop in October.

The Richmond Fed’s regional manufacturing activity index for December rose to 1, from a consensus of -10 and a level of -9 a month earlier. The index thus signals the end of the decline in activity in the region.

On the foreign exchange market, the dollar is steady with a dollar index at 103.9 pts (-0.1%), while the euro is cautiously up 0.1%, above $1.064 interbank. Bitcoin is still trading below $16,650. Finally, on the oil market, a barrel of Brent fell 2.4% to 82.4 dollars.

Values

* You are here increases by 1.4 per cent. The descent into value hell continued yesterday on Wall Street with the title ending up more than 11%, registering its biggest daily drop since last April. The electric car maker has closed in the red for the past seven sessions, the most since September 2018. The Austin-based group’s capitalization has fallen below $345 billion, so Tesla is now less valued than groups such as Walmart, JP Morgan Chase & Co or even Nvidia . Yesterday’s plunge in the stock also results in Tesla falling out of the 10 most valuable companies in the S&P 500, a position Elon Musk’s group has held since joining the benchmark in December 2020.

“Most of the stock’s weakness this year is due to indicators showing declining global demand,” Roth Capital Partners analyst Craig Irwin told Bloomberg. Tesla’s estimated revenue growth “is still incredible, but not a market value of $385 billion,” he added, referring to the value at the end of last week. Analysts on average expect revenue to grow 54% in 2022 and 37% in 2023, according to data compiled by Bloomberg. Selling pressure on the stock was exacerbated yesterday by news that the company has adopted a reduced production plan at its Shanghai plant for January, extending production-cutting measures that began this month, according to an internal document obtained by Reuters to consult. According to the agency, Tesla will produce next month for 17 days between January 3 and January 19 and will halt production of electric vehicles from January 20 to January 31 for an extended Chinese New Year break.

In addition, Tesla halted production at its Chinese factory on Saturday, a day ahead of schedule. No reason was given to anticipate an originally planned break from December 25 to January 1. The Tesla factory in Shanghai, which employs 20,000 workers, last year maintained operations into the last week of December, stopping for just three days for the Chinese New Year holiday. But in addition to the drop in demand, the American group and its suppliers face significant operational challenges related to the peak of Covid-19 infections in the country. Not enough to reassure, while investors also remain concerned about the management of the company by its sulphurous boss. Elon Musk’s recent sale of $40 billion in stock to help the billionaire finance his takeover of Twitter has not gone down well with operators after the entrepreneur previously promised to stop selling shares. He reiterated it Thursday night during a live audio chat on ‘Twitter Spaces’: “I won’t sell shares until – I don’t know – probably two years, certainly not next year under any circumstances, and probably not next year.”

“It feels like confidence is gone and Tesla’s adventure is suddenly over,” said Ipek Ozkardeskaya, chief analyst at Swissquote Bank. “Investors are more eager to see how the looming recession will affect demand for Tesla cars, how competition from other EV makers will affect Tesla’s market share, and when Elon Musk will stop playing elsewhere as Tesla shakes things up.”

* Southwest Airlines again yielding 1.7%, while the airline has canceled thousands of flights in an attempt to get its schedule back to “normal”. The main carrier affected by the historic storm that hit the US over the Christmas weekend, the Dallas-based carrier has canceled thousands of flights in recent days and is struggling to restore normal operations. The group, which has limited reservations for the next few days, drew the ire of the US government on Tuesday as the winter storm highlighted major dysfunctions within it.

While Southwest was responsible for nearly three-quarters of US cancellations on Monday, the US Department of Transportation said it was concerned about Southwest’s “unacceptable” rate of cancellations and delays, as well as reports of a lack of speed in customer service. As of Wednesday morning, Southwest still had cut more than 60% of its usual schedule for the day, or more than 2,500 flights, and more than 58% of its routes scheduled for Thursday, according to ‘FlightAware’ data. The company’s CEO, Bob Jordan, apologized again Tuesday night in a video posted by Southwest, saying the company cut its schedule to buy time to reposition planes and crews. The situation can get much better from Friday.

* Boeing constitutes 0.4 per cent. BOC Aviation Limited offers new 737 MAX. The lessor went to Boeing an additional order of 40 737-8. Deliveries are expected between 2027 and 2028. “We are pleased to continue to strengthen our existing relationship with Boeing with this additional order for 40 more fuel-efficient 737-8 aircraft. This additional purchase brings our total 737 MAX 8 backlog to 80 aircraft ,” said David Walton, chief operating officer of BOC Aviation. Boeing’s net order book reached 571 units at the end of November.

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