Intel and Tesla shock Wall Street

Intel and Tesla's announcements trigger sentiment shift, fueling potential indices correction

By Ahmed Azzam | @3zzamous | 26 January 2024

Market open
  • Asian stocks fall after six-day streak of gains

  • US shares notched another all-time high in sixth day of gains

Asian shares retreated on Friday, losing steam as optimism surrounding China's rescue measures waned. Mainland China and Hong Kong saw declines after a robust three-day rally, highlighting the nation's persistent challenges with debt, demographics, and deflation as obstacles to sustained equity gains.

Meanwhile, on Wall Street, the S&P 500 approached the 4,900 mark, and US 10-year yields dropped by 6 basis points to 4.12%. Swap contracts continued to fully price in a Fed interest-rate cut in May, with increased bets on a total of approximately 140 basis points in cuts for the year.

Amidst these global market shifts, Wall Street experienced a sixth consecutive day of gains, reaching another all-time high. The latest US gross domestic product data exceeded recession forecasts, reinforcing a positive outlook for Corporate America. A key measure of underlying inflation aligned with the Federal Reserve's 2% target, signaling encouragement for many investors.

However, not all was rosy on the US front. Intel faced an 11% postmarket plunge after projecting lower-than-expected sales for the quarter, falling short of estimates. Tesla shares also took a hit with a 12% decline, marking the worst trading day since 2020, as the automaker warned of a slowdown. It's noteworthy that short interest as a percentage of equity float is nearing a record low, adding another layer of complexity to the market landscape.