Stocks dropped Thursday as Wall Street reacted to a mixed bag of corporate earnings, including disappointing results from Tesla. Investors also assessed fresh data that signaled a contracting economy.
The Nasdaq Composite slipped 0.8% to settle at 12,059.56. The Dow Jones Industrial Average lost 110.39 points, or 0.33%, to close at 33,786.62, while the S&P 500 dropped 0.6% to finish at 4,129.79.
All the major averages are on track for a week of losses, and the worst weekly performances for the Dow and the S&P 500 since March. The S&P is down about 0.2%, while the Nasdaq has lost roughly 0.5%. The Dow is down about 0.3% and on pace to snap a four-week win streak.
"Though, so far, it seems that equities have rallied, sentiment has been okay, and you're seeing equity volatility continue to grind lower, the story from corporates is that margins are under pressure and we continue to see that decline," said Anna Han, equity strategist at Wells Fargo Securities.
The mounting concern over downward pressure on profit margins hurt Tesla shares as the electric vehicle maker cut prices on some of its cars during the recent quarterly period. The company posted a more than 20% decline in net income from a year ago after the bell Wednesday. Shares fell nearly 10%.
Other technology stocks showed signs of weakness. Nvidia, Microsoft, Meta Platforms and Apple all finished lower. Seagate Technology shares lost more than 9% after missing estimates and issuing disappointing guidance, citing weak demand.
Energy marked another area of market weakness as oil prices declined more than 2%. Some laggards included APA, Marathon Oil and Phillips 66.
Disappointing results from both AT&T and American Express did little to alleviate some of the market concern. The payments company, offering another look at the health of the U.S. consumer, lost 1% as earnings per share fell short of estimates. AT&T fell 10.4% on slowing subscriber growth fears.
So far this earnings season, about 16% of companies in the S&P 500 have reported results, with about 76% beating EPS expectations, according to FactSet data as of Thursday. Many on Wall Street this season are bracing for an earnings decline. A general lack of profit forecasts, however, has begun to concern some investors.
The real test may come next week as earnings season ramps up with a slate of results from big technology companies, said Art Hogan, chief market strategist at B. Riley Financial.
"If we see a lot of degradation over the course of next week because of guidance ... that might cause a multiple contraction and we might see some of the S&P 500 sell off," he said. "But that just hasn't been the case yet."
He added that despite the incoming economic data, slowdown fears and a banking crisis that rattled the broader financial sector last month, markets have traded sideways in recent weeks.
"We haven't found something that's breaking the back in this market and we've given it plenty of chances," Hogan said.
Elsewhere, a raft of fresh of economic data seemed to signal a contracting economy and the potential for a much bigger slowdown than anticipated. The Philadelphia Fed manufacturing index fell more than expected, to its lowest level since May 2020, while jobless claims rose over the previous week.
Thursday also marked an action-packed day for central bank speakers ahead of the Fed's May policy meeting. That included Cleveland Fed President Loretta Mester, who said that higher interest rates likely loom ahead.
