Stocks struggled for direction for most of Thursday following a red-hot run that saw the S&P 500 and Nasdaq Composite carve out their longest daily win streaks in two years.
The main indexes took a decisive turn lower in mid-afternoon trading, however, thanks to a hawkish speech from Federal Reserve Chair Jerome Powell.
The major benchmarks spent the day bouncing between positive and negative territory. On the economic front, the Labor Department said this morning that initial jobless claims fell by 3,000 last week to 217,000. However, the previous week's data was upwardly revised by 3,000, effectively resulting in a week-over-week wash.
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As for the day's single-stock news, Walt Disney (DIS) popped 6.9% after the media and entertainment giant reported higher-than-expected fiscal fourth-quarter earnings of 82 cents per share.
The company also said it ended the three-month period with 150.2 million Disney+ subscribers, more than analysts were anticipating. This, alongside Disney's plans to boost cost-cutting measures by an additional $2 billion to $7.5 billion, helped offset a top-line miss.
Arm, Instacart slump after earnings
Not all of the day's earnings news was welcomed by investors, though. Arm Holdings (ARM) and Maplebear (CART), the company that does business as Instacart, both tumbled after disclosing their first financial results as publicly traded firms.
Arm, for one, reported 28% year-over-year top-line growth in its fiscal second quarter and earnings that more than doubled from the year prior. However, the semiconductor stock fell 5.2% thanks to a lighter-than-expected fiscal first-quarter forecast.
And despite Instacart disclosing third-quarter revenue that was up 14% year-over-year to $764 million – more than analysts were expecting – shares of CART slumped 10.1%. Commentary from CEO Fidji Simo likely weighed on the stock, as he wrote in the shareholder letter that lower consumer spending, inflation and interest rates could "continue to dampen our current and near-term growth."
Tesla slapped with another Sell rating
In non-earnings news, Tesla (TSLA) spiraled 5.5% after the electric vehicle (EV) maker was slapped with another Sell rating. Late Wednesday, HSBC analyst Michael Tyndall initiated coverage on TSLA with a Sell rating and $146 price target, implying expected downside of more than 30% to current levels.
Tesla's valuation is underpinned by its status as "a very expensive auto company" and its "ambition … to be an innovator," Tyndall says. As a result, the stock is overpriced at current levels. The analyst also believes the company's other segments such as energy storage and artificial intelligence (AI) computing face potential regulatory hurdles that could impact growth.
Tyndall is not the only analyst that's taken a bearish stance toward Tesla. According to S&P Global Market Intelligence, six analysts have a Sell or Strong Sell rating on the EV stock, compared to 21 that have it at Hold and 15 that call it a Buy or Strong Buy.
Powell speech weighs on stocks
And while all of these headlines held Wall Street's attention for most of the day, it was Powell's mid-afternoon speech that sent stocks lower into the close. In prepared remarks for a panel discussion in Washington D.C. today, Powell said the Fed is "not confident" it has reached a "sufficiently restrictive" level for interest rates to bring inflation down to its 2% target.
Powell added that the central bank will continue to monitor economic reports so as not to run the risk of being "misled by a few good months of data."
At the close, the Dow Jones Industrial Average was down 0.7% at 33,891, while the S&P 500 (-0.8% at 4,347) and the Nasdaq Composite (-0.9% at 13,521) also ended solidly in the red.
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