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What you need to know today
Markets tumble
The Dow Jones Industrial Average closed nearly 300 points lower on Friday after a surge in the benchmark U.S. 10-year Treasury yield prompted broader concerns about the economy. Europe’s Stoxx 600 index ended at its lowest level since the start of the year, while gold hit a three-month high and gained for the second straight week amid fears of heightening conflict in the Middle East.
Tesla clocks worst week of the year
Tesla shares dropped more than 15% last week to close at $211.99 on Friday, marking the worst weekly performance for the stock this year as CEO Elon Musk sounded pessimistic about macroeconomic issues on a recent earnings call. Shares of the electric automaker are still up 96% year-to-date.
Big earnings week
Investors will be watching out for an action-packed week of earnings as companies including Microsoft, Meta Platforms, Amazon, Alphabet, General Motors and Ford among others gear up to post their quarterly results. The carmakers will be under the radar this week amid ongoing strikes and contract negotiations with the United Auto Workers union.
X to launch new subscription tiers
Owner Elon Musk said X, the social media service formerly known as Twitter, will launch two new tiers of subscriptions for users. One tier will be “lower cost with all features, but no reduction in ads,” while the other is “more expensive, but has no ads,” Musk said.
[PRO] Earnings playbook
Big Tech takes center stage in what could be a make-or-break week for S&P 500 earnings. About 150 S&P 500 companies are slated to report, including Microsoft, Meta Platforms, Amazon and Alphabet. Those results come during a tough time for Wall Street, as higher rates and conflict in the Middle East rattle investor sentiment. Here’s how to trade a busy week of earnings.
The bottom line
Rising Treasury yields, looming interest rate hikes to fight inflation and the heightening conflict in the Middle East drove investors away from risky assets last week.
The yield on the benchmark 10-year Treasury crossed 5% for the first time since 2007 on Thursday, a level perceived by markets as a potential drag on the U.S. economy as it could translate to higher rates on mortgages, credit cards, auto loans and more.
A move into safe-haven gold seemed like a sensible bet, given the worsening crisis in the Middle East. Gold was up 2.5% last week, recording its second consecutive weekly rise after adding 5.22% in the prior week.
Investors are now bracing for a heavy week of earnings as Big Tech companies including Alphabet, Amazon, Meta and Microsoft will take centerstage.
“We’re hopefully going to see some continued positive strength there on the economy and what they see going forward,” said Ryan Detrick, chief market strategist at Carson Group. “The headlines are scary, for sure. But the fundamentals to us are pretty strong. We’re still seeing earnings season that’s going to come in better than expected.”
This will arrive after a mixed batch of earnings from behemoths like Tesla and Netflix last week. Tesla marked its biggest weekly decline after Elon Musk shared his pessimistic view on the macroeconomic landscape, while Netflix shares soared as markets cheered its new ad-tier subscription plan.
Given the huge role advertisers and subscriptions play for the bottom lines of such firms, it was no surprise that Musk turned his attention to improving the usability of social media platform X, formerly known as Twitter.
Musk said. X is gearing up to launch two new tiers of subscriptions for users, in hopes that it could improve the company’s finances and open new revenue streams. Musk’s sweeping changes across the company, including firing most of its employees and reinstating previously banned accounts, scared advertisers away.