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Momentum Lost After Hawkish Comments From Central Bankers

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  • US major indices falls, US.500 declines 0.6%
  • US regional activity weakening
  • Jobless Claims higher than expected
  • Tesla declines 8% after financial results

The major indices in the US seem to lose momentum after still hawkish comments from central bankers of major economies and tight monetary policy, which is starting to affect macroeconomic data. Today, investors already got familiar with two economic data:

  • Jobless Claims data which came at 245k – higher than 240k expected. Although data came worse than estimates for the fourth time in a row, there was no noticeable reaction on the US500 index and EURUSD.
  • Philadelphia Fed survey for april – US sector in mid-Atlantic region unexpectedly showed weaker activity. Index dropped from -23.2 in March to -31.3 in April. 

During the ECB meeting most bankers agreed to hike rates by 50 bps. However, some bankers would have preferred that the interest rates not be raised until financial market worries had abated. Monetary policy still had some work to do to drive inflation down.

US500 is still trading near the upper resistance line at 4200 points. Bullish momentum is weakening and bearish divergence appeared on the MACD indicator therefore any stronger impulse in upward direction seems to be unlikely. Investors are waiting for more macroeconomic data and the earning season to end.

Company News:

  • Tesla (TSLA.US) falls as much as 8.5% after Q1 financial results were hit by a slew of price cuts, denting profit margins. Net profit was $2.51 billion, down 24% year-on-year. Revenues from the automotive segment, Tesla’s core segment, reached $19.96 billion in the quarter, up 18% from last year.
  • TripAdvisor (TRIP.US) falls 3.3% after Truist Securities cuts the online travel company to hold from buy ahead of its quarterly earnings report
  • IBM (IBM.US) is up 2.2% after the company reported Q1 results that analysts say show positive growth trends. 
  • D.R. Horton (DHI.US) is up 6.2% after the homebuilder’s Q2 results exceed expectations.
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