Wall St falls in 2023 trading kick-off; Apple, Tesla shares drag

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Tesla shares are falling on Q4 deliveries

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Apple hit its lowest level since June 2021

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Indices down: Dow 0.56%, S&P 0.81%, Nasdaq 1.09%

Jan 3 (Reuters) – Wall Street’s main indexes fell on the first trading day of 2023 with big drags from Tesla and Apple, while investors worried about the path of the rally of the Federal Reserve’s interest rates as they awaited minutes from its December meeting.

Shares in electric vehicle maker Tesla Inc fell 13%, marking the Nasdaq’s biggest percentage decline after missing Wall Street estimates for quarterly deliveries. iPhone maker Apple Inc fell 4% after hitting its lowest level since June 2021 following an analyst downgrade due to production cuts in China.

Discretionary and consumer technology stocks were down more than 1% each.

The energy sector, which recorded stellar gains in 2022, fell more than 4%, following lower oil prices on dismal business activity data from China and concerns about the outlook for the global economy .

Major US stock indexes ended 2022 with their biggest annual losses since 2008 after the Fed’s fastest pace of rate hikes since the 1980s to stamp out high inflation decades.

“Even though the calendar has changed, many of the key issues for the market have not, specifically with the Federal Reserve tightening monetary policy as it remains concerned about inflation,” said Chris Zaccarelli, chief investment officer at -Independent Advisor Alliance in Charlotte, North Carolina.

“We are in a bear market. Negative is the default reaction to everything,” he said. “Until the Fed really changes their tone, it’s an uphill battle for the market.”

By 2:22 pm ET, the Dow Jones Industrial Average had fallen 186.41 points, or 0.56%, to 32,960.84; The S&P 500 had lost 31.1 points, or 0.81%, to 3,808.4; and the Nasdaq Composite was down 114.14 points, or 1.09%, to 10,352.35.

LS&P 500 fell 19.4% in 2022, marking a drop of about $8 trillion in market capitalization, while the Nasdaq fell 33.1%, dragged down by growth stocks.

Investors will closely monitor the minutes of the Fed’s December policy meeting on Wednesday, when the central bank raised interest rates by 50 basis points after four straight rate hikes. ’75 basis points, and rates signaled they could stay higher for longer.

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

The weakness in the labor market may give the Fed reason to ease the tightening of its monetary policy, but the data so far has shown that the market remains tight despite rate increases.

Money market participants see a 68% chance that the Fed will raise the benchmark rate by 25 basis points to 4.50% to 4.75% in February, with rates reaching an all-time high of 4.98% until June.

In other stock market action, US-listed Chinese firms such as Alibaba Group Holding Ltd, JD.com Inc and Pinduoduo Inc rose between 1% and 5% on hopes of a recovery after the COVID- 19.

Advancing issues outnumbered declining ones on the NYSE by a ratio of 1.10 to 1; on Nasdaq, a ratio of 1.01 to 1 favored the decliners.

LS&P 500 posted new 52-week high and five new lows; the Nasdaq Composite recorded 83 new highs and 44 new lows. (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)

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