US open: Health insurers, Tesla lead early sell-off

2nd Apr 2024 14:39

(Sharecast News) - US stocks sold off sharply on Tuesday morning in New York with big losses from health insurers and Tesla weighing heavily on markets - as investors continued to take profits following the strongest start to the year since 2019.

Rising bond yields and oil prices were also a drag on sentiment early on, and by 0950 ET, the Dow was down 1.2%, the S&P 500 was 1% lower while the Nasdaq had dropped 1.5%.

The indices have all risen strongly since the start of 2024, rising 5.6%, 10.8% and 10.9% over the first quarter alone, respectively - their best first-quarter performances in five years - and sending both the Dow and S&P 500 to record highs.

Stocks fell on Monday as investors got a chance to react to last week's PCE index data which showed the first pick-up in inflation in five months and stronger-than-expected manufacturing activity, sparking concerns that the Federal Reserve may hold off from cutting interest rates at its meeting in June - as was widely expected by economists.

On Tuesday's agenda, data showed that US job openings unexpectedly rose in February. The closely followed JOLTS report revealed job openings rose to 8.756m from 8.748m the month before, well beyond the 8.740m consensus forecast.

US factory orders meanwhile jumped 1.4% in February after a revised 3.8% slump in January, beating the 1.0% increase expected by the market.

"All the evidence points to an economy growing at a solid pace, with a strong jobs market. There have been decent wage gains and consumer spending is holding up well. While inflation is getting nearer to the Fed's 2% target, [Fed chair Jerome] Powell and others want to see further evidence that it is under control," said David Morrison, senior market analyst at Trade Nation.

Later on, investors will be watching speeches from numerous Fed members, including New York and San Francisco Fed presidents John Williams and Mary Daly, respectively. Meanwhile, Wednesday will see the release of the ADP employment report, followed by the all-important non-farm payrolls data on Friday.

WTI crude was up 1.3% at $84.74 a barrel, while the yield on a 10-year US Treasury was 6.6 basis points higher at 6.486% - its highest since late-November.

Market movers

Health insurers UnitedHealth fell 6% while Humana dropped 13% after the Centers for Medicare and Medicaid Services said payments for private Medicare Advantage plans would increase just 3.7% - much less than the market had hoped.

Shares in Tesla were in reverse after the release of its first-quarter report after the electric car maker reported deliveries of just 386,783 units, well below the 457,000 expected by analysts. The stock fell 5.5% early on.

Tumultuous trading is expected to continue for Trump Media & Technology Group after the Truth Social parent's stock-market debut last week. The stock, which surged more than 30% in its first two days on the market, has now slumped below the $50 mark it debuted at, after the company revealed it lost $58m last year on just $4.1m of revenues. Shares were down a further 1.2% on Tuesday.