(Bloomberg) — An early stock rally collapsed and major U.S. benchmarks appeared poised to continue a selloff that has wiped more than a trillion dollars off stock prices over the past four sessions. Tesla Inc.’s slump after Christmas rose to almost 20% after annual car sales fell.
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Government bond yields remained stable. The yield on the 10-year benchmark was almost 20 basis points above levels before Jerome Powell’s hawkish turn at a December 18 Federal Reserve meeting. Big moves have been made across asset classes after Powell’s administration expressed waning enthusiasm for rate cuts. The Cboe Volatility Index rose for the fourth time in five days.
Tesla slumped after the electronic car maker’s fourth-quarter deliveries missed expectations and annual sales fell for the first time in more than a decade. The stock was on track for its worst five-day decline in more than two years.
This year will be a show-me year for corporate profits, according to Lisa Shalett of Morgan Stanley Wealth Management. As for the grim end to 2024, it’s “too early to call it a bad omen,” she told Bloomberg Television.
Treasurys erased an early advance after weekly jobless claims fell to an eight-month low. A Bloomberg gauge of the dollar’s strength traded at a more than two-year high.
Goldman Sachs economists led by Jan Hatzius noted that “issues with seasonal adjustments could cause unemployment benefits figures to be particularly volatile around the holidays.”
U.S. stocks had been struggling to snap a losing streak that somewhat erased the S&P 500’s best two-year run, which dates back to the late 1990s. The index is up more than 50% since the start of 2023, driven by gains in the tech megacaps and enthusiasm about the profit boost from artificial intelligence.
Meanwhile, an attack on partygoers celebrating New Year’s in New Orleans put US homeland security in the spotlight again, less than a month before Donald Trump is sworn in as president. The Federal Bureau of Investigation is investigating this incident, as well as the deadly Tesla Cybertruck explosion outside Trump’s Las Vegas hotel.
A shooting at a New York City nightclub added to concerns, with authorities saying it was not related to terrorism.