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US stocks retreat; Tesla delivery weakness, reduced rate cut expectations weigh


Investing.com — U.S. stocks fell sharply Tuesday, weighed by reduced expectations for early interest rate cuts as well as hefty losses by EV heavyweight Tesla.

By 09:35 ET (14:35 GMT), the Dow Jones Industrial Average was down 440 points, or 1.1%, S&P 500 traded 49 points, or 0.9%, lower and NASDAQ Composite dropped 220 points, or 1.3%.

Job openings due ahead of payrolls

Strong U.S. manufacturing activity data on Monday saw traders push back expectations of the Federal Reserve’s first interest rate cut this year.

There is more economic data to digest Tuesday, including job openings and durable orders, both for February, but the week’s main focus will be on Friday’s widely-watched payrolls report for March.

The U.S. economy is expected to have added 205,000 jobs in March, slowing from the 275,000 jobs added in February, amid hopes that the economy is set for a “soft landing”, in which inflation moderates but the economy avoids a severe downturn.

A host of Fed officials including New York Fed President John Williams, Cleveland Fed President Loretta Mester and San Francisco President Mary Daly are also scheduled to speak later in the day.

The CME’s FedWatch tool now factors in around 62% odds of a Fed rate cut in June, down from about 70% probability a week ago.

Tesla slumps on deliveries disappointment

In the corporate sector, Tesla (NASDAQ:TSLA) stock fell 6% after the electric vehicle manufacturer reported its first-quarter delivery numbers, falling well short of the expectations. 

The EV giant delivered 386,810 vehicles against the estimated 449,080, according to Bloomberg consensus. 

Competitor Rivian Automotive (NASDAQ:RIVN) stock also fell 4% after the EV company trailed analyst consensus for first-quarter production numbers.

Elsewhere, PVH (NYSE:PVH) stock slumped over 20% after the fashion retailer, which owns the Tommy Hilfiger and Calvin Klein brands, provided disappointing full-year sales guidance, citing a difficult macroeconomic backdrop, particularly in Europe.

UnitedHealth (NYSE:UNH), CVS Health (NYSE:CVS) and Humana (NYSE:HUM) all fell sharply after the Centers for Medicare & Medicaid Services announced unchanged reimbursement rates for Medicare Advantage health plans, signaling the insurers’ margins will remain under pressure next year.

Crude rises on manufacturing strength, supply fears

Oil prices rose Tuesday, boosted by signs of improving demand in China and the U.S., the world’s biggest oil consuming nations, as well as concerns over global supply.

By 09:35 ET, the U.S. crude futures traded 1% higher at $84.58 a barrel, while the Brent contract climbed 0.9% to $88.20 per barrel.

Data released earlier this week showed March manufacturing activity in China expanded for the first time in six months and in the U.S. for the first time in well over a year, which should translate to rising oil demand from these two economic giants.

At the same time, fears grew of more supply disruptions from the oil-rich Middle East grew following a fatal Israeli strike on Iran’s embassy in Syria, marking an escalation in the war in Gaza between Israel and Hamas, which is supported by Iran. Similarly, a Ukrainian drone strike on a Russian refinery threatened to hit supplies from this major producer. 

The Organization of the Petroleum Exporting Countries and its allies, a group known as OPEC+, will hold an online meeting of its Joint Ministerial Monitoring Committee on Wednesday to review the market.


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