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Tesla falls as gross margin lags estimates
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AT&T slides after missing revenue view
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American Express down on Q1 profit miss
(Updates with close of US trading)
By Lewis Krauskopf, Sruthi Shankar and Ankika Biswas
April 20 (Reuters) - Major U.S. stock indexes ended
lower on Thursday after disappointing quarterly reports from
companies including Tesla and AT&T, while investors sought
clarity on the path of interest rates.
Tesla shares tumbled after the electric vehicle
maker posted its lowest quarterly gross margin in two years and
signaled it would continue to slash prices. AT&T shares
dropped after the wireless carrier missed market estimates for
first-quarter revenue and free cash flow.
The S&P 500's rally to start the year is set to be tested by
a first-quarter earnings season that investors expect to show
tepid results. In the early stages of earnings season, analysts
have largely retained last week's expectations of a near-5%
year-on-year fall in quarterly profits at S&P 500 companies,
according to Refinitiv data.
“The market has been overbought for the last week or two,"
said Anthony Saglimbene, chief market strategist at Ameriprise
Financial. "Now that we are going to start the heart of earnings
season, you are going to see that demand is slowing, corporate
profits are coming down and there really isn’t a whole lot of
catalysts to motivate buyers.”
According to preliminary data, the S&P 500 lost 24.53
points, or 0.59%, to end at 4,129.99 points, while the Nasdaq
Composite lost 97.67 points, or 0.80%, to 12,059.56. The
Dow Jones Industrial Average fell 108.71 points, or
0.32%, to 33,788.30.
In other earnings news, American Express Co profit
missed Wall Street estimates and its shares fell, weighing on
the Dow.
Shares of Lam Research rose after the chip-making equipment supplier's revenue topped estimates, while shares of D.R. Horton increased after the homebuilder forecast full-year revenue above estimates. Investors are assessing the path for interest rates, and many expect a slowing U.S. economy could lead the Federal Reserve to start cutting rates later this year as the central bank juggles its fight against inflation. Data showed the number of Americans filing new claims for unemployment benefits increased moderately last week, suggesting the labor market was gradually slowing. Markets were focused on a bevy of Fed officials speaking at the end of the week ahead of the central bank's meeting early next month, when investors widely expect a 25 basis point hike. Dallas Fed President Lorie Logan said she is assessing whether the Fed has made enough progress on fighting inflation based on three markers, including "further and sustained" improvement in measures of inflation. Adding to worries, the cost of insuring exposure to U.S. sovereign debt rose to the highest level in over a decade as investors fretted about negotiations in Washington to raise the U.S. government debt ceiling. (Reporting by Lewis Krauskopf in New York, Sruthi Shankar and Ankika Biswas in Bengaluru; Additional reporting by Vansh Agarwal; Editing by Arun Koyyur, Vinay Dwivedi and David Gregorio)
Messaging: lewis.krauskopf.thomsonreuters.com@reuters.net, Twitter: @LKrauskopf))