Stocks Pause as Tesla Results Temper Buoyant Mood: Markets Wrap

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(Bloomberg) — Global stocks paused as disappointing results from Tesla Inc. took the edge off the recent rally, and investors waited to see if the European Central Bank would hint at when it might start cutting interest rates.

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Tesla shares dropped 8% in US premarket trading after the electric vehicle maker missed earnings estimates and flagged slower growth this year. Contracts on the Nasdaq 100 traded flat, with traders looking ahead to results from Intel Corp. later in the day.

While International Business Machines Corp. gained 7% after delivering a positive revenue outlook, some other tech earnings underwhelmed investors. European chipmaker STMicroelectronics NV dropped after giving weaker sales guidance, while South Korea’s SK Hynix Inc., the world’s no. 2 maker of memory chips, also fell after results.

The pause follows a strong recent run for stocks, as investors have grown confident interest rates will fall this year and that economic growth is likely to stay resilient.

“We are still in a bad-news-is-good-news environment and that if earnings drop a bit and margins tick down, it would be a further guarantee that interest rates will go down,” said Frederic Leroux, head of cross asset at Carmignac Gestion.

The ECB is expected to keep rates on hold at 4% later in the day, and its statement and post-meeting news conference will be parsed for clues on the path forward. While markets are leaning toward an April rate cut, ECB officials seem to be penciling in June for their first move.

Similarly, US data is expected to show the economy expanded at a 2% annualized rate in the fourth quarter. A slew of other figures will also emerge, including inventories, new home sales and weekly unemployment claims, which should offer a snapshot of the economy before the next Federal Reserve meeting.

A key focal point for risk assets is the Treasury market, where long-dated yields have been on the rise. On Thursday, the 30-year yield eased about 2 basis points, just off its highest level this year.

Corporate News:

Boeing Co. shares drop after the US Federal Aviation Administration halted planned increases in production of the 737 Max, the company’s most important model.
Wizz Air shares slide after third-quarter sales and profits missed estimates, which the budget airline blamed on the cancellation of Israel flights.
Nokia Oyj said it might see a pickup in the second half of the year as its internet network infrastructure business brings in sales and cost-cutting measures pay off.
Alaska Air Group Inc. expects slower growth this year and a financial hit of $150 million after a midair accident led to the grounding of a portion of its Boeing Co. 737 planes.
Comcast Corp.’s Peacock streaming service picked up 2.8 million new subscribers with its online-only NFL Wild Card Game on Jan. 14, the research firm Antenna estimates.
Las Vegas Sands is up in premarket trading the casino resort operated posted 4Q revenue that beat estimates.

Key events this week:

Eurozone ECB rate decision, Thursday
Germany IFO business climate, Thursday
US GDP, initial jobless claims, durable goods, wholesale inventories, new home sales, Thursday
Japan Tokyo CPI, Friday
US personal income & spending, Friday
Bank of Japan issues minutes of policy meeting, Friday

Some of the main moves in markets:

Stocks

S&P 500 futures were little changed as of 6:56 a.m. New York time
Nasdaq 100 futures were little changed
Futures on the Dow Jones Industrial Average fell 0.2%
The Stoxx Europe 600 fell 0.3%
The MSCI World index was little changed

Currencies

The Bloomberg Dollar Spot Index was little changed
The euro was little changed at $1.0895
The British pound was little changed at $1.2734
The Japanese yen was little changed at 147.53 per dollar

Cryptocurrencies

Bitcoin rose 1% to $40,151.11
Ether rose 0.6% to $2,230.12

Bonds

The yield on 10-year Treasuries declined two basis points to 4.15%
Germany’s 10-year yield advanced one basis point to 2.36%
Britain’s 10-year yield advanced one basis point to 4.02%

Commodities

West Texas Intermediate crude rose 0.8% to $76 a barrel
Spot gold rose 0.2% to $2,017.27 an ounce

This story was produced with the assistance of Bloomberg Automation.

–With assistance from Ruth Carson, Tassia Sipahutar and Chiranjivi Chakraborty.