Wall Street encounters a ‘healthy’ pullback; Tesla drops after fatal crash

US stocks closed lower on Monday, slipping from last week’s record levels, as investors await guidance from first-quarter earnings to justify high valuations, while Tesla Inc shares fell after a fatal car crash.

The electric-car maker slid 3.4% after a Tesla vehicle believed to be operating without anyone in the driver’s seat crashed into a tree on Saturday north of Houston, killing two occupants.

The stock was the biggest drag on the S&P 500 and Nasdaq Composite Index. An 8.4% drop over the weekend in bitcoin, in which Tesla has an investment, also weighed on its share price.

The Dow Jones Industrial Average fell 123.04 points or 0.36% to 34,077.63. The S&P 500 lost 22.21 points or 0.53%, at 4,163.26; while the Nasdaq Composite dropped 137.58 points or 0.98% to 13,914.77.

The S&P 500 was mostly lower with Microsoft Corp, Amazon.com Inc and Nvidia Corp also weighing on the benchmark index as analysts await results this week and next that form the bulk of earnings season.

Corporate outlooks should indicate to what degree the rally from last year’s lows can continue. Analysts expect first-quarter earnings to have grown 30.9% from a year ago, according to Refinitiv IBES data.

The US economy is poised to boom as consumers hold US$2 tril in savings in excess of pre-pandemic levels, said Doug Peta, chief US investment strategist at BCA Research, adding markets are in pause mode.

“If indeed we do keep grinding higher that would be healthy, that would suggest that the grinding higher is sustainable,” Peta said. “The pullbacks along the way are healthy.”

Real estate was the only one of the 11 S&P 500 sectors to post gains.

Volume on US exchanges was 9.86 billion shares.

A recent retreat in benchmark 10-year Treasury yields from 14-month highs has helped high-flying technology stocks to rebound, while strong economic data has lifted the S&P 500 and the Dow to record levels.

The S&P 500 has gained the past four weeks, its longest winning streak since August 2020. – April 20, 2021

Subscribe and get top news delivered to your Inbox everyday for FREE