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S&P 500 Cuts Losses as Tesla-led Acceleration Offsets Weakness in Cyclicals

Stock Markets Mar 28, 2022 03:26PM ET
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© Reuters.

By Yasin Ebrahim

Investing.com – The S&P 500 cut losses Monday as a Tesla-led surge in consumer discretionary offset weakness in cyclical stocks including banks amid further cues from the bond market pointing to a potential recession.

The S&P 500 rises 0.43%, the Dow Jones Industrial Average slipped 0.06%, or 19 points, the Nasdaq rose 1%.

Consumer discretionary was pushed higher by an 8% surge in Tesla (NASDAQ:TSLA) after the electric automaker said it planned to split its stock to pave the way to pay dividends to shareholders.

The rally in Tesla comes just days ahead of the EV automaker’s update on first-quarter deliveries.

“We believe by the end of 2022 Tesla will now have the capacity/run rate for overall ~2 million units annually from roughly 1 million in 2021 with Berlin and Austin green-lighted to start production,” Wedbush said in a note.

Cruise line stocks were also doing the heavy lifting, with Carnival (NYSE:CCL) and Norwegian cruise up sharply even as pandemic lockdowns returned to focus after Shanghai initiated its most restrictive lockdown in two years following a surge in cases.

The bond market was quick to price in the potential impact on global growth at a time when investors fear the Federal Reserve’s hawkish path to curb inflation threatens to tip the economy into recession. The five-year Treasury yield briefly rose above the 30-year yield for the first time since 2006.

Bank stocks were sharply lower as a flattening yield tightens net interest margin, limiting the ability to profit from lending. Synchrony Financial (NYSE:SYF), SVB Financial (NASDAQ:SIVB), and M&T Bank Corp (NYSE:MTB) were down more than 3%.

Energy was the biggest drag on the broader market as fears that the lockdown in China could hurt demand and fresh Ukraine-Russia peace talks cooled worries about supply-disruptions weighed on oil prices.

“Growing concerns that China’s strict zero-Covid policy will lead to repeated lockdowns in key business centres […] is unlikely to lead oil demand in China unscathed,” Commerzbank said in a note.

Big tech traded mostly higher shrugging off pressure from falling chip stocks after Goldman Sachs soured sentiment on the sector, downgrading trio of stocks including, Microchip Technology (NASDAQ:MCHP), Teradyne (NASDAQ:TER), Qorvo (NASDAQ:QRVO) amid concerns about “challenging” macro backdrop.  

Meme stocks to add to recent gains, with AMC Entertainment (NYSE:AMC) rising more than 39% after the move theater chain touted more “transformational” deals are in the pipeline. GameStop (NYSE:GME) was up more than 17%.

In other news, Coinbase (NASDAQ:COIN) gained more than 8% as rumors swirled the company was eyeing a deal to acquire 2TM, the parent company of Latin America’s biggest crypto brokerage Mercado Bitcoin

S&P 500 Cuts Losses as Tesla-led Acceleration Offsets Weakness in Cyclicals
 

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Comments (11)
Antonio Velardo
Antonio Velardo Mar 28, 2022 5:50PM ET
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Is Tesla split a buy opportunity?
Chad Richer Than You
Chad Richer Than You Mar 28, 2022 4:11PM ET
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Where is the recession advocates end of days cult xD? Green this week because I want it to.
Timur Grets
Timur Grets Mar 28, 2022 4:11PM ET
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Recession coming in next 40-60 days !100%
Christos Rousakis
Christos Rousakis Mar 28, 2022 4:05PM ET
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no stocks only American circusssss is only one stock the rest is nothing hahahaha come on junk
Mitchel Pioneer
Mitchel Pioneer Mar 28, 2022 3:56PM ET
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"Stocks Cut Losses," the most prolific headline in internet news history.  Another "late trade" miracle for the greatest financial FRAUD in history, and biggest investment JOKE in the world.
AI Wu
AI Wu Mar 28, 2022 3:29PM ET
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the indices are designed to be bull. a weak stock gets replaced with a stronger one.  the indices are backbone of the pension funds. the need to perform to feed the retires.
Antonio Velardo
Antonio Velardo Mar 28, 2022 3:28PM ET
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Tesla is doing really great despite shangay lockdown.
Dave Jones
Dave Jones Mar 28, 2022 3:21PM ET
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Tesla is worth more than Ford and Toyota yet produces a fraction of the output.
David Vaughan
David Vaughan Mar 28, 2022 3:19PM ET
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Then you ask yourself why Tesla is rallying and realize it's all smoke and mirrors
Jason Son
Jason Son Mar 28, 2022 3:10PM ET
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anyone proofreading the headline over there?
Jason Son
Jason Son Mar 28, 2022 3:10PM ET
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anyone proofreading the headline over there?
 
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