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Wall St starts the year off with a dip; Apple, Tesla share drag

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By Sinéad Carew and Amruta Khandekar

(RockedBuzz via Reuters) – Major Wall Street indexes closed lower on the first day of trading of 2023 as Tesla and Apple put the brakes on them, as investors worried about the Federal Reserve’s path to hike interest rates ahead of the December meeting minutes.

Shares of electric vehicle maker Tesla Inc closed 12% lower after hitting their lowest level since August 2020 and put pressure on the consumer discretionary sector following a failure to meet Wall Street estimates for fourth quarter deliveries.

Shares of Apple Inc plunged 3.7%, with the iPhone maker hitting its lowest level since June 2021, after a report from Nikkei Asia indicated weaker demand. Additionally, an analyst downgraded the stock’s rating due to production cuts in COVID-19-hit China.

The energy sector, which posted stellar gains in 2022, closed 3.6% down on the first trading day of the year as oil prices fell on gloomy trade activity data from China and concerns about the global economic outlook. [O/R].

Major US stock indexes in 2022 showed the largest annual losses since 2008, following the Fed’s fastest pace of rate hikes since the 1980s to stave off decades-high inflation.

“2022 has been a terrible year for stock markets. Some of the reasons haven’t gone away because we changed the calendar,” said Michael James, managing director of equity trading at Wedbush Securities in Los Angeles. “There is still high anxiety, uncertainty about the Fed and inflation. Until there is clarity on this, it will be difficult to make upward progress in equity markets.”

Given Apple and Tesla’s influence on the market, James also cited specific concerns about them over broader S&P weakness on Tuesday.

The Dow Jones Industrial Average fell 10.88 points, or 0.03%, to 33,136.37; the S&P 500 lost 15.36 points, or 0.40%, to 3,824.14; and the Nasdaq Composite fell 79.50 points, or 0.76%, to 10,386.99.

The S&P 500 had lost 19.4% in 2022, marking an approximately $8 trillion decline in market capitalization, while the Nasdaq fell 33.1%, dragged down by growth stocks.

Among the 11 major sectors in the S&P 500, behind energy, technology was the second largest decline, shedding 1%, with Apple accelerating the decline to end the day with a market valuation of less than $2 trillion per the first time since March 2021.

Tesla’s largest daily percentage drop since September 2020 helped make the consumer discretionary index S&P’s third-weakest sector down 0.6%.

The benchmark’s biggest gain on the day was communications services, with Facebook parent company Meta Platforms Inc leading the advanced there with a 3.7% gain.

Investors on Wednesday will be closely following the minutes of the Fed’s December policy meeting, when the central bank raised interest rates by 50 basis points after four consecutive 75 basis point hikes and reported rates could stay higher for longer.

Other economic data expected this week include the ISM manufacturing report, also on Wednesday, and the December jobs report on Friday.

Weak labor markets may give the Fed a reason to ease monetary policy tightening, but the data so far has shown that the market remains tight despite rate hikes.

Money market participants see a 68% chance that the Fed will lift its key rate by 25 basis points from 4.50% to 4.75% in February, peaking at 4.98% by June.

Advancing issues outnumbered declining issues on the NYSE by a ratio of 1.42 to 1; on the Nasdaq, a ratio of 1.20 to 1 favored the advanced.

The S&P 500 posted a new 52-week high and five new lows; the Nasdaq Composite recorded 92 new highs and 58 new lows.

On US stock exchanges, 10.618 billion shares changed hands, marking an increase from the previous week’s lower volume due to the holiday season. Compared to the average of 10.799 billion shares over the past 20 trading days.

(Reporting by Sinéad Carew in New York; Shubham Batra, Ankika Biswas and Amruta Khandekar in Bengaluru; Editing by Shounak Dasgupta, Arun Koyyur and Jonathan Oatis)