Thought of the Morning: Tesla
Tesla shares under pressure again on Wednesday -- stock is down almost 10% this week. A helpful thought buried in Moody's credit rating downgrade on Tesla Tuesday. "These cash needs will likely require Tesla to undertake a near-term capital raise exceeding $2 billion. Moreover, if the company maintains its expected pace of expansion, it will likely need to raise additional capital during the second half of 2019."
U.S. stocks edged higher Wednesday, with tech stocks attempting a modest rebound, as global markets whipsaw in the wake of a major selloff in the sector that has triggered higher equity volatility and a drive in global government bond markets.
Early indications from U.S. equity futures suggest markets will struggle to recover from yesterday's sell-off, although contracts tied to the Dow Jones Industrial Average marked 57 points to the upside after Tuesday's 345 point tumble and those linked to the broader S&P 500 holding 4.5 points, or 0.17%, in the green. The market's key gauge of of near-term volatility, the CBOE's (VIX) index, slipped 1.38% to 22.19 in global trading hours.
Tech stocks led yesterday's declines on Wall Street, led by a 12% plunge for Twitter Inc. (TWTR) - Get Report shares following a note from Citron Research that suggested the social media firm was one of the most susceptible to regulatory changes triggered by yet more headlines surrounding Action Alerts Plus holding Facebook Inc.'s (FB) - Get Report multi-billion dollar data scandal.
The NYSE FANG+ Index, which tracks the moves of ten of the biggest and most active tech stocks in the world, slumped 5.63% Tuesday to a six week low of 2441.50 points, taking $180 billion in market cap along with it and taking the benchmark of big tech stocks into correction territory from its March 12 peak.
Many of the stocks in the equal-weight index were also moving in pre-market trading again today, with Facebook marked 1.46% to the upside, Netflix Inc. (NFLX) - Get Report marked 1.1% higher and Alibaba Holdings (BABA) - Get Report trading little-changed from yesterday's close. Telsa Inc. (TSLA) - Get Report , however, was the standout decline, falling 1.51% to indicate an opening bell price of $275.00, the lowest in nearly a year.
The S&P 500 Information Technology index slumped 3.47% yesterday, wiping out all of its gains for the year, as investors worried about stricter government oversight on the sector and watched bellwether names such as Action Alerts Plus holdings Google parent Alphabet (GOOGL) - Get Report (-4.5%), Tesla (-8.22%) and Nvidia Corp. (NVDA) - Get Report (-7.76%), Netflix (-6.14%) and Apple Inc. (AAPL) - Get Report (-2.56%) registered significant declines. The NYSE FANG+ index shed 5.63% to close at a six-week low of 2,441.5 points.
The Stoxx 600 index, the region's broadest measure of share prices, slipped 0.48% to 365.82 points in the opening hours of trading, led by a 0.6% decline for Germany's DAX performance index. Britain's FTSE 100 traded little-changed from last night's close at 6,997.5 points.
The Stoxx Europe 600 Technology index, the sector benchmark, was marked 1.9% lower at 426.99 points, taking the year-to-date decline to 3.4%, with Tesla Inc. (TSLA) - Get Report supplier Infineon AG (IFNNY) falling 4.36% to €21.48, chipmaker AMS AG (AMSSY) tumbling 8.67% to €102.40 and STMicroelectronics NV (STM) - Get Report declining 5% to €18.09.
The slide sent investors running for cover in the bond markets, where benchmark U.S. 10-year Treasury yields fell 6 basis points to 2.775% before paring that move to around 2.75% in early trading even as the market remained in the throes of $294 billion in new supply this week as the Treasury continues to fund the government's $1.5 trillion tax cut plan. European bonds were also better bid Wednesday, with 10-year German bund yields falling to a January low of 0.494%.
Overnight in Asia, tech stocks led benchmarks around the region to the downside, with the MSCI Asia ex-Japan index falling 1.32% into the close and the Shanghai Composite sliding 1.4% to finish the session at 3,122.22 points. Japan's Nikkei 225 shed 1.34% to close at 21,031.31 points.
Global oil markets were also softer, with prices falling sharply in overnight trade after the American Petroleum Institute published a surprise 5.3 million increase in domestic crude stocks late Tuesday, a figure that traders used to take profits for a market rally that had lifted prices around the world to multi-week highs.
Brent crude contracts for May delivery, the global benchmark, were seen 43 cents lower at $69.68 per barrel while WTI contracts for the same month were marked 55 cents lower at $64.70 per barrel.