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Corporate Woes Mount: Tesla, PVH, and Intel Shares Tumble Amidst Earnings Concerns

By:JJ Kinahan

Tesla, PVH, and Intel face setbacks and bitcoin faces fluctuating values

  • Market sentiment shifts: Fed rate cut expectations decline, sparking volatility amidst economic data scrutiny.

  • Corporate challenges emerge: Tesla, PVH, and Intel face setbacks, hinting at earnings season headwinds.

  • Geopolitical tensions escalate: Crude oil surges on Middle East unrest, while bitcoin faces fluctuating values.

The market commenced the week with consecutive setbacks, witnessing the S&P 500 sliding 0.7% and the Nasdaq Composite nearly 1%.

Despite volatility, which soared over 7% to close at 14.61, remaining beneath historical averages, bond yields climbed as the benchmark 10-year note saw a rise to 4.36%. This shift in equity and bond dynamics reflects dwindling market certainty regarding imminent Federal Reserve interest rate cuts.

Economic data releases are leaving Fed observers deciphering signals amidst robust growth, contrary to anticipated catalysts for multiple interest rate cuts this year. With just a 3% probability of a rate cut in May and a 63% likelihood in June, according to the CME—down from over 70% a week prior—the latest job openings report (JOLTs) underscored stronger-than-expected data.

Fed Chairman Powell's speech at 11:10 a.m. Central Time today marks a pivotal moment amid a flurry of Fed member addresses, preceding Friday's release of March's employment figures. Experts project 205,000 new jobs and a 3.9% unemployment rate.

Important stock moves

On Tuesday, Tesla (TSLA) shares plunged nearly 5% after the company posted disappointing first-quarter car deliveries, which were down 8.5% year over year. Shares of PVH Corp., (PVH), parent company of Calvin Klein and Tommy Hilfiger, experienced 22% drop, after executives projected an 11% first-quarter sales decline.

Similarly, shares of Intel (INTC) tumbled 5% after the company reported a $7 billion loss in semiconductor manufacturing, hinting at potential challenges for the forthcoming earnings season, while Disney grappled with a costly boardroom battle, reflected in unchanged premarket shares.

Commodities, crypto and data releases

In the commodities realm, crude oil prices surged nearly 2%, closing at $88.92, amid escalating tensions in the Middle East following accusations against Israel for an attack on an Iranian diplomatic building in Damascus. Conversely, bitcoin saw a 5% decline, resting at $68,500.

The market's recent profit-taking trend following a robust first quarter is underscored by a plethora of economic data releases, preceding the impending earnings season, set to commence with bank stocks.

The economic data, although robust, requires contextualization, with earnings likely to play a pivotal role. Positive earnings would corroborate a healthy and expanding economy, while weak earnings could signal heightened production costs with little yield—a scenario currently leaving investors in a state of cautious anticipation.

For today, a retesting of Tuesday's lows wouldn't be surprising, following yesterday's market pullback and subsequent rebound. Should yesterday's lows hold, a potential rally could ensue, while a break below yesterday's close could signal a retest of 5100 in the S&P 500. Amidst these dynamics, adherence to investment plans and long-term objectives remains paramount.

JJ Kinahan is CEO of IG North America—which includes tastylive, tastytrade and IG's FX Business. Kinahan traded for 21 years at the Chicago Board Options Exchange. He serves on the CBOE Advisory Board and the SIFMA Options Committee. @thejjkinahan

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