Tesla Plummets as Dreary Market Persists in Face of Powell's Reassurance
The market saw another dreary day as mega-cap technology was dragged down by Elon Musk's firm.
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A gain of 2.2% in mega-cap Apple AAPL helped to offset weakness in hundreds of smaller stocks but it was another dreary day for the market.
Breadth was solidly negative and the Russell 2000 lost 0.6%. The S&P500 squeaked out a small gain but the big move in Apple wasn’t good enough to turn the Magnificent Seven positive, which lost 0.6%.
Tesla TSLA was the biggest drag on mega-cap technology with a loss of more than 6%.
There wasn’t any significant news causing the poor action. There are some worries about tariffs, but Jerome Powell’s testimony in front of Congress was benign. He emphasized that the economy was in good shape and that the Fed could wait for a while before it does anything further with interest rates. Powell will appear before the House of Representatives on Wednesday, but it isn't likely there will be any big surprises.
The big even on Wednesday will be the CPI report at 8:30 am ET. The headline number is expected to tick up to 0.3% from 0.2% and that is already causing some pressure on bonds and higher interest rates. Some economists fear that tariffs will add to inflationary pressures, but so far they have been targeted and not creating any major problems.
The market’s biggest problem is that the Trump administration is moving so quickly with major policies that it is creating a substantial amount of uncertain. The ramifications of all the moves that Trump is making are hard to assess, especially with things changing so quickly.
There is also the issue of a shift in leadership. The Magnificent Seven names are no longer leading the broad market but there isn’t any clear new leadership. There has been some rotational action into secondary stocks but it has been extremely inconsistent and there are groups like biotechnology that are hitting new lows.
Market players are uncertain and they are staying on the sidelines, waiting for better price action and news flow. Many stocks are drifting lower but there is no clear support so far.
It is a very difficult market to trade and the best course of action is to be vigilant and stay patient until there is better technical action.
Have a good evening. I’ll see you tomorrow.
At the time of publication, DePorre had no positions in any securities mentioned.
