The market is certainly known for its volatility and unpredictability, and Wednesday, June 7th’s market was no exception as major US stocks and indices wavered back and forth between ups and downs.
From some major Wall Street indices like the Nasdaq (US-TECH 100) hitting new lows to EV-giant Tesla (TSLA) soaring. Here are Wednesday’s major market movers and the factors that may have propelled the volatility:
US Markets Perplexed by Economic Data
It may not come as a surprise to learn that economic data releases around the world can sometimes send ripples across the various global markets. This may be evident in yesterday’s market swings as economic data from Canada to China along with some tech sell-offs, may have caused market swings across major US indices.
This is because the Bank of Canada unexpectedly hiked interest rates to their highest level in 22 years. It may have come as a surprise to many given the fact that the central bank has not hiked rates since January. Accordingly, Wednesday’s record-high hike of 25 basis points brought Canada’s policy rate to a whopping 4.75% and may have indicated that inflation is taking a toll on the world’s 9th largest economy.
Moreover, perhaps making matters worse for the global economy, an unexpected drop in Chinese exports may have caused many to wonder whether the world’s 2nd biggest economy is really recovering from the COVID-19 losses as the return to pre-COVID normalcy continues. In May, China's exports experienced a significant decline of 7.5% compared to the previous year, contrasting with economists' projected 0.4% decrease.
One analyst even commented that “weaker global trade is not a new story, but it is surprising how quickly China's reopening boost has faded, with backlogs of work supporting export numbers until now, even as other countries have continued to see demand for their goods wane.”
In addition, the Organisation for Economic Co-operation and Development (OECD) released a less-than-optimistic economic report on Wednesday in which it revealed that inflation and rate hikes may still be recurring motifs in the near future.
On the flip side, the OECD raised its growth outlook a bit to 2.7% and investors may be hopeful regarding the potential of the S&P 500 entering a bull market. On the one hand, tech stocks like Alphabet (GOOG) and Microsoft (MSFT) traded lower and pushed the Nasdaq downward on Wednesday. On the other hand, mega-cap tech companies may have pushed the S&P 500 near a new bull market before Wednesday's lows.
Accordingly, as investors and traders attempted to digest the aforementioned mixed data, the S&P 500 (USA 500) and the tech-heavy Nasdaq respectively closed the trading day with 0.3% and 1.2% losses. On the flip side, the Dow Jones Industrial Average (USA 30 - Wall Street) gained 0.2%.
Tesla’s Wednesday Surge: Is the EV Giant Recharged?
Despite the aforementioned economic hurdles and possibly dreary market conditions, Wednesday may have been kinder to EV leader, Tesla, as the company surged about 4% in early trading to new highs unseen since October, and ended the day with a gain of about 1.5%.
The rise may be attributed to the news revealing that Tesla’s Model 3 sedans are now eligible for the complete federal electric vehicle tax credits. In turn, it may have pushed Tesla toward its longest winning streak since January 2021 as it gained for the ninth consecutive day.
This may have been the good news many Tesla traders seek especially following 2022’s 69.1% drop which was driven by Musk’s controversial Twitter purchase along with other factors. While the company has not reached November 2021’s $410 high, as of the time of the writing, its shares are up by 107.8% since the beginning of the year.
As a result, Tesla’s CEO, Elon Musk, has reclaimed his position as the wealthiest man alive with a net worth of $216 billion, as per Forbes' estimations. He even surpassed LVMH chairman Bernard Arnault for the first time in six months.
However, with more market uncertainty looming, traders and investors who are holding onto this cautious optimism may want to keep track of any substantial events that can shift or sustain Telsa’s trajectory in the long run. (Source:Forbes)
US Markets Shift Asian Stocks
Wall Street’s Wednesday losses may have pushed some Asian stocks downward today, Thursday, June 8th. As tech behemoths experienced some sell-offs on Wall Street, Asian indices like the Nikkei 225 (Japan 225) slid 0.8%, today, Thursday.
These drops came against the backdrop of a sharp upward revision in Japan’s estimated economic growth rate for the January-March quarter. Despite analysts' expectations, Japan's estimated economic growth rate for the January-March quarter was revised upward to 2.7%. Nevertheless, this positive revision did not prevent declines in other areas.
However, as mentioned above, the markets are known for their volatility and the fortunes could still reverse for these major US and Asian stocks and indices. Traders will have to wait and see if the markets will unveil new progressions.