Dow futures fall 165 pts; Tesla earnings weigh on sentiment

By Peter Nurse

Investing.com -- U.S. stocks are seen opening lower Wednesday amid concerns about a future economic slowdown, while disappointing earnings from EV giant Tesla (NASDAQ:TSLA) weighed.

At 06:30 ET (10:30 GMT), the Dow futures contract was down 165 points, or 0.5%, S&P 500 futures traded 30 points, or 0.7% lower, and Nasdaq 100 futures dropped 140 points, or 1.1%.

The main indices closed in a subdued fashion Wednesday, with the blue-chip Dow Jones Industrial Average dropping 80 points, or 0.2%, while both the broad-based S&P 500 and the tech-heavy Nasdaq Composite ended largely flat.

The Fed’s Beige Book, a periodic look at conditions in the U.S. central bank’s regional districts, noted that the U.S. economy stalled in recent weeks, with hiring and inflation slowing and access to credit narrowing.

This release marked a deterioration in sentiment from the March report, published just before the banking crisis erupted, which showed a resilient economy.

Yet, despite these signs of a slowing economy, Federal Reserve Bank of New York President John Williams said Wednesday that inflation is still at problematic levels and the U.S. central bank will act to lower it.

The Fed is widely expected to tighten monetary policy by 25 basis points in early May, but this may become the last hike of the year as the largest economy in the world potentially contracts.

There is more economic data to study Thursday in the form of jobless claims and existing home sales, while Federal Reserve Governor Christopher Waller, Atlanta Fed President Raphael Bostic and Cleveland Fed President Loretta Mester are among central bank speakers slated to comment on the state of the U.S. economy.

In the corporate sector, Tesla stock traded 7% lower after the electric vehicle manufacturer missed first-quarter estimates, posting its lowest quarterly gross margin in two years.

IBM (NYSE:IBM) stock rose just under 2% premarket after the tech giant beat expectations for first-quarter profit after the close Wednesday and signaled demand for IT services was better than feared.

More earnings are due from the likes of telecom firm AT&T (NYSE:T), financial services company American Express (NYSE:AXP), carrier Alaska Air (NYSE:ALK), and private investment firm Blackstone Group (NYSE:BX).

Oil prices slumped Thursday, falling to their lowest since late March, just before the surprise OPEC+ production cut announcement.

By 06:30 ET, U.S. crude futures traded 1.7% lower at $77.83 a barrel, while the Brent contract dropped 1.6% to $81.81.

The drop seems largely down to worries about global demand, particularly that the U.S., the largest crude consumer in the world, heads into a recession later this year.

This has outweighed the news that U.S. crude stockpiles fell by 4.6 million barrels last week, according to data released Wednesday by the U.S. Energy Information Administration.

Additionally, gold futures rose 0.4% to $2015.85/oz, while EUR/USD traded 0.1% higher at 1.0964.